Getting a car after bankruptcy, and how hard it may to qualify for a new loan, is something many people who file for bankruptcy worry about. A lot of people assume that once they file bankruptcy, there’s no way they’ll ever be able to replace their car. However, this is not necessarily the case.
More and more Americans are filing bankruptcy to relieve the pressure of debt. Yet, if you look around, you’ll still see a lot of new cars on the road. Chances are, a good number of these people have a bankruptcy on their credit credit report. So, how can you get behind the wheel of a new car after you have filed?
The first, and possibly most important, thing to do is to wait until the bankruptcy has been discharged. Before that, it will be difficult, if not impossible to find a lender that will consider you for a loan.
Once the bankruptcy is discharged, you’re starting with a clean slate. So, pay your bills on time and in full. By doing this, you’re proving that you’re worthy of the risk lenders take by providing you with a loan.
Now that you’re ready to start shopping for a car, it’s important to understand what you can afford. A major factor in many people’s debt is their car payment. They simply drive a car they can’t afford. It’s extremely important to avoid falling into this trap. Make a budget and find out what you can spend on a monthly payment. Don’t forget to factor in fuel and insurance.
It’s time to contact a car loan specialist, preferably one that specialized in helping people who have filed bankruptcy. These lenders have the necessary connections to help you in ways that you cannot do yourself.
Once you have your new car, you can expect to pay a bit more in interest than someone with a spotless credit history. But, as long as you make your payments on time, you should be eligible for a lower interest rate within a year or two. At that time, you can always refinance the car and lower your payments even further. However, be wary of salesmen that tell you that you will be able to refinance in a few months. Often when someone buys a new car, that person will initially owe more than the car is worth due to interest or extras. Plan on keeping the original loan for two years and you’ll be fine.
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