Bankruptcy stays on your credit report for 7 years after you file, which is a fact that can impact both how likely you are to get a loan and the interest rate you’ll get. Most people assume that you have essentially no chance of getting a good car loan after Chapter 7 bankruptcy, but this isn’t always the case. Here’s everything you need to know about getting auto loans after Chapter 7 bankruptcy.
There are plenty of places that regularly give auto loans to people who have declared bankruptcy, which means you have options. While you may feel somewhat awkward asking what different places can offer you, make sure you do. Don’t just take the first offer you’re given or you could end up paying a lot more than you need to in interest. Plus, those who pay higher interest rates are more likely to get behind on their payments and have their car repossessed, something you definitely don’t want to happen to you.
Look at Credit Unions
Most people go with one of the big banks for their auto loans, but there are several good reasons to check out your local credit union. Because they’re based in your local community, they have a good understanding of the financial climate and are therefore more likely to be flexible with the loans they’d be willing to offer. This is particularly true in areas where everyone is having a hard time, such as towns where one or more of the major employers has closed its doors. If you have a good track record of paying your bills either before or since your bankruptcy, your local credit union could be your best bet.
Don’t Expect Luxury
While you certainly don’t need to only look at clunkers, be modest in your expectations of what kind of car you’ll be getting. You’re much more likely to be approved for loans that are below a certain price and cars below that price are much more likely to have interest rate caps.
Chapter 7 bankruptcy doesn’t have to put a damper on your plans to get a new car. Talk to the most experienced Chapter 7 bankruptcy lawyer in Las Vegas to learn more about what you can expect by calling DeLuca and Associates today at (702) 252-4673.
Take Your Search Online
Over a million new bankruptcy cases are filed in the United States every year. This means that millions of other people are also looking for the best options for car loans after a bankruptcy. Comparing vehicles and financing options online is a good start. The internet can also connect you with digital communities where people are discussing and finding solutions to this issue. Online forums can be good places to ask questions and get information on lenders. Social media platforms such as Facebook allow users to create groups focused on specific subjects. Look for like minded bankruptcy groups where people are talking about the best options for buying a car. Leveraging the internet and social media allows you to draw on the experiences of people from around the country. Of course not everything you read online is accurate or helpful. Be sure to fully research and confirm everything.
Be Careful with Second Chance Lenders
Once you start shopping for a car, you will likely find dealers who are all too happy to sell a car to someone who has gone through a bankruptcy. It is important to be cautious and pay close attention to the details of any auto loans after Chapter 7 offered by so called second chance lenders. Some car dealers offer in-house financing. They will often use low monthly payments to mask high interest rates and long loan terms. If the length of your loan is going to exceed the life of the vehicle, you should probably shop somewhere else. If you are buying a used car, make sure you know it’s full history. Some sellers will buy worn out high mileage vehicles at auction, give them an exterior clean up, and then attempt to unload them at a profit to unsuspecting buyers. Take the time to shop around and compare offers.