Can I purchase a car following Chapter 7 bankruptcy? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our aim is to assist you make better financial decisions by providing you with interactive financial calculators and tools that provide objective and original content, by enabling you to conduct research and compare information for free – so that you can make financial decisions with confidence. Bankrate has partnerships with issuers including, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Make money The products that appear on this site come from companies that pay us. This compensation can affect the way and where products appear on this site, including the order in which they may appear in the listing categories, except where prohibited by law. Our loan products, such as mortgages and home equity, and other home loan products. However, this compensation will have no impact on the information we provide, or the reviews you see on this site. We do not include the entire universe of businesses or financial offerings that could be accessible to you. Share: Maskot/Getty Images
2 minutes read published 31 March 2022
Writer: Jerry Brown Written by Contributing writer Jerry Brown is a contributing writer for Bankrate. Jerry writes about personal loans as well as auto loans as well as debt-management. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are committed to helping readers gain the confidence to control their finances through providing precise, well-researched, and reliable facts that break down complicated topics into bite-sized pieces. The Bankrate guarantee
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Therefore, this compensation may affect the way, location and in what order products appear within listing categories, except where prohibited by law. We also offer mortgage, home equity and other products for home loans. Other factors, like our own proprietary website rules and whether a product is available within your region or within your self-selected credit score range may also influence the way and place products are listed on this site. Although we try to offer the most diverse selection of products, Bankrate does not include the details of every credit or financial item or product. After you go through Chapter 7 bankruptcy, it can be on your credit report for as long as 10 years from the date of filing. In this time, you might require a car. It is, however, more challenging, you can take out a car loan in the event of bankruptcy. To offset the higher risk, a lender might be able to charge you a higher interest rate or ask for an additional down amount. Do I need to buy a car following bankruptcy? The answer to this question will depend on your financial situation and transportation needs. Cost-effectiveness: Any vehicle you buy must be within the budget. Ensure that it is by not just the cost of the car. Transportation: If you already are able to get around with your current transportation system, then it might be best to hold off from buying a vehicle. The interest rate you pay for it will be lower than you would like in the event that bankruptcy remains on your credit report. Utilizing cash to avoid the auto loan before bankruptcy is removed from your credit report could be the best choice. By using cash, you can avoid the loan completely. Three ways to finance a car using an auto loan after bankruptcy When trying to finance your car with an auto loan following bankruptcy, you could have an issue in getting an lender and some may not be willing to collaborate with you. Once you have found a lender willing to allow you to take out a loan, you likely will not be eligible for the . 1. Buy-here, pay-here dealerships During the course of your research, you may come across buy-here or pay-here dealerships which don’t need credit checks. Even though these dealerships can assist you in the event that you have had bankruptcy, you can end with a bill that is higher than what the vehicle is worth. Before using this option make sure you do your research and ask about hidden charges. 2. Credit unions If you’re a , you could try applying for an auto loan at a credit union. Since credit unions are not for-profit owned by members which means you’ll have more luck securing financing there. In addition, you may get an interest rate that is lower. 3. Co-signer If those options don’t work, a different option could be to get someone with good or excellent credit to co-sign an auto loan to you. Before going this route inform the person . In the unfortunate event that you do not pay back your loan the co-signer will be responsible for the payments and this could adversely affect their credit. When to purchase a car depends on your financial situation. Although the right time to buy your car varies depending on your financial circumstances and needs, this is the time you will get the most favorable bargain and rate. The delay until your credit score is improved to purchase a vehicle could lower the interest rate that a lender offers you. But if you can’t wait and require a vehicle immediately, look for the most affordable deal. Because of the pandemic, some car manufacturers were forced to close their factories for months and saw inventory and sales decrease. If you’re in need a vehicle, you may want to to circumvent the lack of new cars. However, be sure to do your research and avoid buying a car you can’t afford. The bottom line is that while you are able to buy a car after bankruptcy, you should be prepared to pay a higher interest rate if you take out the loan. While you wait for your credit rating to increase could lower your rates however, it’s not always feasible. Explore all your loan options before taking out a loan. Benefit from dealer incentives and try to stay clear of dealerships that have hidden fees. Learn more:
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Written by the writer who contributes to the project. Jerry Brown is a contributing writer for Bankrate. Jerry writes about personal loans, auto loans and managing debt. Written by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are passionate about helping readers gain confidence to take control of their finances with concise, well-researched and well-written information that breaks down complex subjects into bite-sized pieces.
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