No Down Payment Option

For the average over-extended citizen of the United States, no down payment financing has great appeal. For those who are financially savvy, its not such a good deal, because most of the time, these people have good or excellent credit, and have funds available to make the down payment, which will lower the total amount financed and the interest paid.

It can be a great thing in some cases, and not such a great thing in others. Sometimes it can mean that you will have to make more payments, pay more interest, and stretch out the length of the finance term. Some people are willing to pay more and see a no down payment situation as the best option for them.

Many times mortgage lenders tempt new home buyers with no down payment financing only to secure a loan with them for a higher interest rate, which them allows them to make more profit in the long run. People with bad credit or no credit especially may need to take advantage of this type of financing. Not only will it allow them to buy their own home, but it will help them to establish or rebuild their credit.

Real estate is not the only purchase that can be made with a no down payment option. Many car dealers offer the same type of financing, but again, this type of deal is usually attractive to those who cannot afford the down payment, don’t care if they pay more in payments, interest, and finance charges, or simply don’t have sufficient credit.

Businesses and companies that offer no down payment financing options usually have something to gain by offering you this incentive; they are not doing it simply to be sympathetic to your situation and to be nice! It is usually costing you more money that is ending up in their pockets.

So be informed and educate yourself before you sign on the dotted line. Consumers need to read the fine print and make sure they understand every detail of the no down payment financial transaction. It doesn't matter what you’re buying, there is always some catch, some way that you end up paying for this convenience in the end.

I'm not saying all no down payment deals are bad, it’s just that many are not going to benefit you in the long run. Especially when you are going to pay a lot more than what you should be at the end.