Can I Buy A Car After Bankruptcy?
Buying a car after bankruptcy can be hard work. If you´ve been through bankruptcy getting a loan can be hard and it will usually come at a much higher interest rate than normal.
Although it is harder, you can still buy and finance a car if you have poor credit as a result of filling bankruptcy. In the current economic environment of very slow car sales, this will work in your favor if you end up financing at the dealer.
Before you go out and look for a new car I want to outline some of the challenges you will be facing and some of the questions to ask yourself. I will also give you a few tips to increase your chances of getting the right loan for the car you want.
What you can do before going car shopping
First you have to understand why lenders would be reluctant to lend to you. After all you already filled for bankruptcy once.
There are lenders that specialize in lending to borrowers with a bankruptcy filling in their record. However, and before you start looking for a loan, you should have already started repairing your credit record.
Along with online lenders and specialty local lenders, you can also negotiate with the car dealership where you plan on buying the car.
Since different lenders have different requirements, shopping for your auto loan online can be extremely convenient. Some lenders might require than the bankruptcy be discharged. Also, have no incidents within the previous year is also a plus. Obviously you also have to meet certain age and income requirements.
Here are some things to do before buying a car:
* Increase your credit rating – Take out a collateralize credit card and make a few monthly payments. You should also verify that the information is being reported to one of the major credit agency. If possible, also try to get a small, unsecured loan from a local bank.
* Try to get your loan pre-approved before negotiating the car purchase. If you can get this done you will probably be able to get a better price on the car.
* Consider getting a co-signer for the loan. Keep in mind that this person could be held responsible if you fail to pay off your loan.
* Negotiate the price of the car FIRST than negotiate the loan deal. Usually the dealer already has access to your credit information at this point. If you have gotten this far it probably means that the dealer thinks he can get you a loan.
Before closing the deal, check your lender with the Better Business Bureau to see if there are complaints.
Should you join a credit union?
One other option you might consider for your car loan is joining a credit union. By belonging to a credit union you can probably qualify for above average deals on car loans. You can probably qualify for a car loan from your credit union if the bankruptcy is over one year old and you haven´t had any incidents since than.
You can search online for a credit union near you.
Should you buy a new car?
Although buying a car after bankruptcy might be very important for you to regain your footing, don´t settle for a loan that has an excessive interest rate, or any kind of abusive clause, such as excessive late payment and pre-payment penalties.
And make sure you compare the total cost over the life of the loan and not just the monthly payment. Depending on the age of the car, you don´t want the life of the loan to extend beyond the life of the car.
You should ponder if buying a new car after bankruptcy is even the right thing to be doing. Can you wait a little longer? Should you buy a lower priced car?
These are just some of the questions you should be asking yourself before buying and getting a loan for a new car.