Can I purchase a car in the event of a Chapter 7 bankruptcy? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make better financial choices by providing you with interactive tools and financial calculators that provide objective and original content, by enabling you to conduct research and compare data for free and help you make sound financial decisions. Bankrate has agreements with issuers including, but not restricted 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 could affect how and where products appear on the site, such as, for example, the sequence in which they appear within the listing categories, except where prohibited by law. Our mortgage, home equity and other products for home loans. But this compensation does affect the information we publish, or the reviews that appear on this website. We do not cover the universe of companies or financial offers that may be open to you. SHARE: Maskot/Getty Images
2 min 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 and automobile loans as well as debt-management. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate from late 2021. They are committed to helping readers gain the confidence to control their finances with precise, well-researched, and reliable information that breaks down otherwise complicated subjects into digestible pieces. The Bankrate promises
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So, this compensation can influence the manner, place and when products are listed in the event that they are not permitted by law for our mortgage, home equity and other home loan products. Other factors, such as our own proprietary website rules and whether a product is available in your area or at your own personal credit score may also influence the way and place products are listed on this site. While we strive to provide an array of offers, Bankrate does not include the details of each credit or financial products or services. After you go through Chapter 7 bankruptcy, it may be on your credit report for up to 10 years from the date of the filing. Through this time, you might need to buy a car. And while it is more difficult, you can take out an auto loan after bankruptcy. In order to compensate for the greater risk that comes with bankruptcy, a lender might offer a greater interest rate or demand more of a down amount. Should I purchase a vehicle in the aftermath of bankruptcy? The answer depends on your financial circumstances and the transportation requirements. Cost-effectiveness: Any vehicle you purchase should be well within the budget. Ensure that it is by not just the sticker price. Transportation If you have reliable transportation, it might be better to put off from buying a vehicle. Your interest rate is likely to be lower than you would like in the event that bankruptcy remains on your credit report. Utilizing cash to avoid the auto loan prior to the bankruptcy being removed from your record could be the best choice. With cash, you could avoid the loan entirely. Three ways to finance a vehicle using an auto loan after bankruptcy When trying to finance your car using an auto loan after bankruptcy, you may face an issue in finding an lender and some may resist working with you. Also, once you find an lender willing to let you borrow money, it is likely that you will not be eligible for the . 1. Buy-here, pay-here dealerships During your search, you could encounter buy-here, pay-here dealerships which don’t require credit checks. Even though these dealerships can assist you in the event that you’ve had bankruptcy, you may end with a bill that is higher than what the car’s value. Before using this option make sure you do your research and inquire about hidden fees. 2. Credit unions If one of them , you could try applying for an auto loan there. Because credit unions are non-profit owned by members which means you’ll have more luck securing financing there. In addition, you may be able to secure a lower interest rate. 3. Co-signer If those options don’t work, an alternative would be to find an individual with excellent to good credit rating to sign an auto loan for you. Before going this route be sure to explain the situation to the person . In the unfortunate event that you fail to pay your loan, the co-signer will be accountable for the debt, and it could negatively impact their credit. The time to buy a car is contingent on your financial situation. While the right time to buy your vehicle is contingent on your financial circumstances and your personal situation, it is the time when you will get the most favorable deal and the best interest rate. Waiting to see if your credit improves before you purchase a car could reduce the interest rate a lender gives you. But if you can’t wait and require a vehicle now, search for the most affordable deal. Due to the pandemic, some car manufacturers were forced to shut down their plants for months, and saw sales and inventory decline. If you’re in the market for car, you may want to to circumvent the shortage of new cars. Be sure to conduct your research and don’t purchase a vehicle that you cannot afford. In the end, while you can purchase a car after bankruptcy, you should be prepared to pay a higher interest rate in the event you take out an loan. While you wait for your credit rating to increase can reduce your interest rate but it’s not always possible. Research all of your lending options prior to taking out the loan. Benefit from dealer incentives and try to avoid dealerships that charge hidden fees. Find out more about:
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Written by a contributing writer Jerry Brown is a contributing writer for Bankrate. Jerry writes about personal loans and Auto loans and managing debt. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate from late 2021. They are passionate about helping readers gain confidence to control their finances by providing clear, well-researched facts that break down otherwise complex subjects into bite-sized pieces.
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