Getting a Car Loan After Bankruptcy
Leading a normal life while filing for bankruptcy or immediately after can be challenging. Needless to say, the bankruptcy filing will be public record and it could potentially affect requests for funding that you make in the future. Getting a car loan after bankruptcy isn’t an exception.
What are your options in terms of auto financing following the bankruptcy? Can you buy a car immediately after the discharge? Such options do exist but it’s very important to go through the terms and conditions carefully.
Car Loan after Bankruptcy
Certain financial institutions do provide car loans to people who have just finalized bankruptcy proceedings. The terms and conditions of such loans, however, aren’t always the most favorable ones.
The first thing you will have to do is talk to your lawyer. Depending on the type of bankruptcy filing, you may need to get a permission from your trustee before you can take on new debt. Thus, you have to make sure such a possibility is viable under the current circumstances.
If possible, you may want to wait for a certain period before getting a new loan. Waiting for some time will provide an opportunity to begin rebuilding your credit score. A better credit score could make it easier for you to get a loan that features more favorable conditions.
If you do insist on getting a car loan at that very moment, there will be certain things to pay attention to.
The interest rate and the repayment plan are the two most important factors. Needless to say, a person who has just gone through bankruptcy will have to opt for a loan that features a higher than usual interest rate.
One other thing you should do is make sure that you have a stellar driving history. Auto loan providers will take a look at it to determine just how much of a risky client you are. If you’re known for following the law and being an impeccable driver, chances are that you’ll be given financing and that the terms would be more or less favorable, taking in consideration the circumstances.
Always Shop Around
There are dealerships that work with people who have just gotten a Chapter 7 discharge or who are in the middle of their Chapter 13 payment plan. It may be a good idea to contact several such dealerships working with Arizona clients before making up your mind.
There are a few additional considerations for the purchase of a new automobile.
The first one is paying cash for the purchase. If you use a large cash sum to make the payment in the case of a Chapter 7 bankruptcy, this cash could eventually have to be listed as an asset. This is why postponing the purchase for the future makes the most sense, when possible.
Buying a large, expensive or a luxurious automobile following your bankruptcy discharge is also not smart. This is particularly true for a person undergoing Chapter 13 bankruptcy repayments. The same applies to a vehicle that has a large engine, which means that it consumes massive amounts of fuel. There should be a good enough reason for the acquisition of such an automobile.
Visit the different dealerships, explore the options and inquire about their terms and conditions. Some of them may need a court document before moving forward with the process. Thus, if you need to get a car quick, you have to acquaint yourself with the administrative procedure. There could be some steps that will force you to wait.
Once you communicate your desires, you will be provided with pre-approval financing terms and conditions. This is what will typically have to be shown to the bankruptcy trustee/court, in order to move forward with the car purchase.