Your credit affects many aspects of your life, perhaps even more than you realize. Consumers with significant negative marks on their credit report and a low credit score will likely have more difficulty securing a new line of credit, renting an apartment, and avoiding high interest rates on loans and credit cards.
Poor credit also makes it difficult, and sometimes impossible, to secure an auto loan. If you find yourself in this position and are trying to purchase a new vehicle, you may be tempted by dealerships that advertise, “No credit, no problem!” These dealerships finance loans “in-house” and often carry extremely high interest rates when compared to loans from banks, credit unions, and other lenders.
Before agreeing to a loan with one of these dealerships, be sure to shop around and see if there is a bank or other lender who is willing to loan to you. The Consumer Financial Protection Bureau (CFPB) warns that an auto loan with high interest rates, like those that come from these dealerships, may not be worth it; the cost of the loan could outweigh the benefit of purchasing the vehicle.
For more information on financing through a dealership versus a bank, see the CFPB’s overview. For more on how to sign an auto loan agreement, see this resource on steps to take to secure an auto loan.