Listening to the radio the other day, I heard for probably the umpteenth time, an ad from a car dealership lauding their credit forgiveness program, which helped lots of people just like you or me, that had fallen on hard times, into a new car. Oh boy, it warms my heart knowing that there is still good in people, and that businesses are willing to help us out. FALSE. I want to break it down a bit, as sometimes these ads do sound pretty good and might sound like a smart move for you. 

In my article on credit score, I explained how your credit score works. Missing your monthly payment, or having too much debt will decrease your credit score. If your credit score isn’t what it should be, you’ve perhaps missed a payment or two. Perhaps you only make the minimum payment, and your debt seems to be continually growing. Or, maybe right after graduating from college with some debt, you went out and bought a brand new car and then a house. 

If you think that you qualify for a credit forgiveness program, take a step back. If your credit isn’t what it should be, you probably shouldn’t be getting a new car. You’ve probably got some debt hanging over your head. Perhaps you’re not done paying off your last car loan. Sounds to me like getting a new car loan will only make your problems worse. Sure you’ll have yourself a shiny brand new car but at what expense? More debt and more monthly payments to keep up with? That doesn’t seem to be a great decision to me. Don’t buy the new car, keep your old one. If you truly are in need of a car, buy a used one that’ll get you from point A to B. Getting another loan when you’re already buried in debt is just kicking the can down the road. Call a spade a spade and admit that you’ve got a problem. Come up with a plan and get yourself out of debt. 

This should go without saying but car salesmen are not your friends. They are not trying to help you out and won’t sleep better that night knowing they’ve helped a hard working person out, they’ll sleep better because they got some sucker with credit problems to sign on to a loan that carries a high interest. 

Car dealerships make their money mostly off of the interest from the loans, not so much from the profit of selling the actual car. Interest rates, in addition to being determined by the market, fluctuate with the credit worthiness of the borrower. Someone with good credit, (which I hope to inspire all my readers to be) won’t have to pay as high of a rate, because they are less risky. Someone with credit problems carries more risk of defaulting (not being able to pay) and thus will have to pay a higher interest rate. Some of these rates get scary high too. 

 If you’ve got credit problems, don’t keep kicking the problem down the road. You don’t need a new car, or new clothes, or to be going out to eat every night. Getting into more debt will just make the problem worse. Debt seems to be commonplace in our society today. Don’t fall into that trap. Debt is a bad thing and can ruin lives. Get a hold of your finances and start tackling that debt today. 

Don’t feel too bad for the car salesman though, there are other suckers out there lining up to buy cars. Just not you! 

 Other articles you might enjoy:

How does car insurance work?

Getting a car loan to improve your credit score?

Why you should never buy a new car