Do I have the right to purchase a vehicle after Chapter 7 bankruptcy? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make smarter financial decisions by providing you with interactive financial calculators and tools as well as publishing independent and objective content. We also allow users to conduct research and compare information at no cost to help you 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 website are provided by companies that compensate us. This compensation can affect the way and where products appear on the site, such as the sequence in which they appear within the listing categories and other categories, unless prohibited by law. This applies to our loans, mortgages, and other home loan products. This compensation, however, does have no impact on the content we publish or the reviews you read on this site. We do not include the vast array of companies or financial offers that may be available to you. Share: Maskot/Getty Images
2 minutes read published March 31, 2022
Writer: Jerry Brown Written by Contributing writer Jerry Brown is a contributing writer for Bankrate. Jerry writes about home equity, personal loans and automobile loans and debt management. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since the end of 2021. They are dedicated to helping readers gain the confidence to manage their finances by providing clear, well-researched facts that break down complicated topics into bite-sized pieces. The Bankrate promise
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So, this compensation can influence the manner, place and in what order products are displayed within the categories of listing, except where prohibited by law. This is the case for our mortgage, home equity and other products for home loans. Other elements, like our own website rules and whether or not a product is offered in the area you reside in or is within your personal credit score may also influence the way and place products are listed on this site. While we strive to provide the most diverse selection of products, Bankrate does not include the details of every credit or financial product or service. After you go through Chapter 7 bankruptcy, it may remain on your credit file for up to 10 years following the date of the filing. In this time you may have to purchase a vehicle. It is, however, more difficult, you can obtain an auto loan in the event of bankruptcy. In order to compensate for the greater risk that comes with bankruptcy, a lender may be able to charge you a higher interest rate or ask for an additional down payment. Do I need to buy a car following bankruptcy? The answer to this question depends on your financial circumstances and the transportation requirements. The affordability of any car you purchase should be well in your financial budget. Ensure that it is by not only the sticker price. Your current transportation If you are able to get around with your current transportation system, then it may be a good idea to wait on buying a car. The interest rate you pay for it will be lower than you would like with bankruptcy still showing on your credit report. Cash: Avoiding an auto loan prior to the bankruptcy being removed from your record may be the best option. If you pay cash, you can avoid the loan entirely. Three ways to finance a vehicle using an auto loan after bankruptcy When you attempt to finance your car with an auto loan following bankruptcy, you could have more difficulty in getting a lender — some will be reluctant to work with you. Once you have found a lender willing to let you borrow money, you probably won’t qualify for the . 1. Pay-here, Buy-here, and Pay-here dealers During an online search you may encounter buy-here, pay-here dealerships that do not require credit checks. While these dealers will work with you if you went through bankruptcy, you can end with a bill that is higher than what the vehicle is worth. Before you decide to go through this process be sure to do your homework and inquire about hidden fees. 2. Credit unions If you’re a , you could try applying to get an auto loan there. Since credit unions are not for-profit owned by members which means you’ll have more chances of securing financing. Additionally, you may have the chance to get a lower interest rate. 3. Co-signer If none of those options work, another option would be to get someone with good to excellent credit, to be a cosigner on an automobile loan to you. Before going this route inform the person . In the unfortunate event that you default on your loan, the co-signer will be responsible for the payments which could adversely affect their credit. When you should buy depends on your financial situation. While the right time to buy your vehicle varies based on your financial circumstances and needs, this is the time you’ll get the best deal and the best interest rate. If you wait till your credit rating is improved to buy a car may reduce the interest rate that a lender will offer you. However, if you aren’t waiting and require a vehicle immediately, look for the lowest price. Due to the pandemic, some car manufacturers were forced to close their factories for months and saw sales and inventory fall. If you’re in need of a vehicle, you may want to to circumvent the lack of new cars. Be sure to conduct your research and don’t purchase a vehicle you can’t afford. The bottom line While you can purchase a car following bankruptcy, you should be prepared to pay more interest if you take out the loan. Although waiting for your credit score to improve may lower your rate, it’s not always possible. Explore all your loan options before taking out a loan. Make use of dealer incentives and try to stay clear of dealerships that have hidden fees. Learn more:
Written by a contributing writer Jerry Brown is a contributing writer for Bankrate. Jerry writes about home equity, personal loans as well as automobile loans as well as debt-management. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are passionate about helping readers gain the confidence to manage their finances through providing precise, well-studied details that cut otherwise complicated topics into digestible pieces.
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