New wheels after bankruptcy
How to Get a Car Loan after Bankruptcy
TDS Reader Solutions
My Problem: Getting a Car After Bankruptcy
This March my husband and I had to file for bankruptcy. A couple of years ago we leased a truck. Next April that lease will be up and the truck has to be turned back into the dealership. Our problem is: where do we turn for another vehicle? Anyone have any ideas or maybe has been thru this before. I don't know if they even give people who are in a bankruptcy situation car loans or not?? Any help or ideas would be appreciated.
Check With "Special Financing Department" to Get a Car After Bankruptcy
We just filed for bankruptcy in March and just received our discharge papers two weeks ago. Once your discharge papers are in you can get a car through some dealerships. Call and ask if they have a "special financing department". The interest rates aren't going to be cheap, but they can definitely help! We told them that we are looking for a specific car payment range. Luckily the dealership we are going through now is giving us a deal where they take care of basic maintenance so we only have to worry about car payments. In two years they will refinance our loan. We'll either keep the same car or they will let us look for another car, but we will have lower interest rates. But, like at any dealership, check the car prices at Kelly Blue Book or at Edmunds.com. Either place will insure that you are not getting ripped off, which some dealerships might do because they know you need a car.
Credit Unions Help With Interest After Bankruptcy
I had a similar situation several years ago. My lease ended and I wanted to buy the car I was leasing from the dealership. They turned me down, even though all my payments were current and I had signed a reaffirmation agreement at the time of my bankruptcy. My bank offered me a loan at 8.5% interest if I agreed to directly deposit of my paycheck. Someone suggested using the credit union at work. I was not a member, but I called them. They said I could apply for membership and purchase one share ($25.00 deposited to my savings account) and apply for a loan the same day. I had to add a one-page description of the circumstances of my bankruptcy to the application, but the next day they approved my loan for 7.25% interest. I did not have to directly deposit my paycheck. I have one year to go on that loan, have had no further money problems, and dealing with the credit union has been a pleasure. If your workplace doesn't offer a credit union, check out credit unions in your area. Some are available to people based on organization or church affiliation, or even residence in a certain community.
Check With Charities for Inexpensive Cars
My husband and I learned of a cheap way to get a working car, unfortunately, after we bought ours. We bought our Ford Taurus from a man who bought it cheap and resold it to us at double his cost.
Have you ever heard one of those charities that ask you to donate your working or non-working cars to them? Apparently, they repair these cars, (only non-working or badly worn parts) and sell them to raise money.
My car was in running condition, with cosmetic (paint) defects and needed new interior light bulbs. Soon after we got it, its ancient battery needed to be replaced. Otherwise, it ran beautifully and had lots of little extras like faux wood paneling, power steering and locks, etc. We put about $130 dollars into it, and only $70 was truly necessary (the battery). On top of that, the car was spotlessly clean and was far more car then we could otherwise have afforded. We paid $1200 cash. The man who sold it to us bought it directly from the charity for $585. The blue book value for this model and year was $3000.
Keep Current on Your Payments After Bankruptcy
I, too, went through bankruptcy but kept my leased car until the end. I was able to buy a car with no problem (except a little higher interest rate) after I turned in my leased vehicle. The key was that I kept the car payments current. Granted, I didn't have much of a choice which car I got, but I was able to purchase a car at the first dealership I went to. Just remember, don't go to several places and have them run credit checks on you. That only worsens your credit rating.
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Check to see if Releasing is Available After Bankruptcy
A friend of mine also declared bankruptcy and had a leased vehicle. When the lease was up GM leased him another vehicle because he was in good standing with them. They should go back to the same place they leased the last vehicle and talk it over with them.
Great Way to Rebuild Credit for a Car
I was in a similar situation several years ago. I had a new pickup repossessed and filed bankruptcy shortly thereafter. When I needed a "new" vehicle, I found one of the Ford dealers in town had a "credit - rebuilding" program. I had to have $1500 down, but I got a four-year-old, off lease fleet pickup truck. I had to pay weekly - $51.65 (I paid $60/wk) for two years. The truck had a two year, 24,000 mile warranty! This gave me sufficient credit that I was then able to get a mortgage!
Most big cities have dealerships that offer "credit rebuilding". Check the newspaper advertising section or call around. The bonus is that not only do you have wheels to drive, you begin to restore the credit that your bankruptcy destroys (TIP: Don't get in over your head but do like I did and get something low priced enough that you can actually pay a few $$$ extra each week.) A reputable dealer in a big city isn't going to sell you a piece of "junk" either, and will give you a warranty in case anything in the drive train quits working before you get it paid for!
Attorney May Be Helpful for Bankruptcy Woes
Sometimes your bankruptcy attorney will have names of used car dealers that will work with people who filed for bankruptcy. The attorney sends the dealer a letter that says that the bankruptcy has been through court and any future bills cannot be added so the car dealer is safe from debts being cancelled.
Also, once the bankruptcy is official (through the court plus 60 days), they may start getting offers from local car dealerships to buy new or used cars (usually new). The bankruptcy is public record and these car dealerships use this information for prospective car sales. All are legitimate.
Reviewed March 2018
Take the Next Step
- Get all the facts before you buy or sell a vehicle. Edmunds.com will give you what you need to know to make a confident deal.
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