Can I purchase a car after Chapter 7 bankruptcy? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our mission is to help you make smarter financial decisions by offering interactive financial calculators and tools, publishing original and objective content. This allows you to conduct research and compare data for free and help you make financial decisions with confidence. Bankrate has agreements with issuers including, but not limited to American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The deals that are displayed on this site come from companies who pay us. This compensation can affect the way and where products appear on the site, such as for instance, the order in which they may be listed within the categories of listing and other categories, unless prohibited by law. Our loan products, such as mortgages and home equity, and other home loan products. This compensation, however, does affect the information we provide, or the reviews that you read on this site. We do not cover the entire universe of businesses or financial deals that might be available to you. SHARE Maskot/Getty Images
2 minutes read published March 31, 2022
Jerry Brown Written 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. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are dedicated to helping readers gain confidence to control their finances with clear, well-researched facts that break down complicated topics into bite-sized pieces. The Bankrate guarantee
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They ensure that what we write ensures that everything we publish is accurate, objective and reliable. Our loans reporters and editors are focused on the points consumers care about the most — the various kinds of loans available as well as the best rates, the best lenders, the best ways to repay debt, and much more. So you can feel confident when investing your money. Editorial integrity
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You have money questions. Bankrate has the answers. Our experts have helped you understand your finances for more than four years. We strive to continuously provide consumers with the expert advice and tools needed to make it through life’s financial journey. Bankrate follows a strict policy, so you can trust that our content is truthful and reliable. Our award-winning editors, reporters and editors produce honest and reliable information to assist you in making the best financial decisions. The content created by our editorial team is objective, factual, and not influenced through our sponsors. We’re transparent about the ways we’re in a position to provide quality information, competitive rates and useful tools to our customers by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated for the placement of sponsored products andservices or when you click on certain links posted on our site. This compensation could affect the way, location and when products appear within listing categories in the event that they are not permitted by law. We also offer mortgage or home equity products, as well as other home loan products. Other factors, like our own rules for our website and whether or not a product is offered in your area or at your personal credit score can also impact the way and place products are listed on this website. We strive to offer the most diverse selection of products, Bankrate does not include details about every credit or financial item or product. When you file for Chapter 7 bankruptcy, it can be on your credit report for up to 10 years following the filing date. During this period you may need to buy a car. And while it is more challenging, you can take out a car loan in the event of bankruptcy. To compensate for the increased risk that comes with bankruptcy, a lender might offer a greater interest rate or demand more of a down payment. Should I purchase a vehicle after bankruptcy? The answer to this question depends on your financial circumstances and your transportation requirements. Affordability: Any car you purchase should be well within the budget. Ensure that it is by , not just the price on the tag. Current transportation: If you already have reliable transportation, it may be best to hold off purchasing a car. Your interest rate is likely to be lower than you would like in the event that bankruptcy remains appearing on your credit record. Using cash: Avoiding an auto loan before bankruptcy is removed from your credit report could be the best option. By using cash, you could avoid the loan completely. Three methods to finance a car with an auto loan after bankruptcy When trying to finance your car using an auto loan following bankruptcy, you may face a tougher time finding a lender Some will not be willing to collaborate with you. If you do find a lender willing to let you take out a loan, you likely aren’t eligible for the . 1. Pay-here and Buy-here dealerships the course of your research, you could find buy-here and pay-here dealers that don’t require credit checks. Although these dealerships will assist you in the event that you’ve had bankruptcy, you can end with a bill that is higher than what the car’s value. Before you decide to go through this process, do your research and inquire about hidden costs. 2. Credit unions If your credit union is a , you may be able to apply to get an auto loan at a credit union. Because credit unions are non-profit and owned by members, you may have better luck securing financing there. Plus, you might have the chance to get an interest rate that is lower. 3. Co-signer If none of those options work, a different option could be to get someone with good to excellent credit rating to sign an auto loan on your behalf. Before going this route inform the person . If you default on your loan the co-signer would be responsible for the payments which could adversely affect their credit. When to purchase a car depends on your financial situation. While the right time to buy your car varies depending on your financial circumstances and needs, this is the time you’ll get the best deal and the best interest rate. Waiting until your credit score improves before you buy a car may reduce the interest rate a lender offers you. However, if you aren’t waiting and require a vehicle immediately, look for the best deal. Due to the epidemic the car makers were forced to shut down their plants for months, and saw sales and inventory fall. If you’re in need of an automobile, you might want to to circumvent the lack of new cars. But do your due diligence and avoid buying a car that you cannot afford. In the end, while you may be able to purchase a vehicle following bankruptcy, you should anticipate paying a higher interest rate if you take out a loan. Although the waiting time for your credit to rise could lower your rate, it’s not always possible. Research all of your lending options before taking out an loan. Benefit from incentives from dealers and stay clear of dealerships that have additional fees. Learn more:
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Written by Contributing writer Jerry Brown is a contributing writer for Bankrate. Jerry writes about personal loans and auto loans and managing debt. Edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate since late 2021. They are committed to helping readers gain the confidence to take control of their finances by providing clear, well-researched information that breaks down otherwise complicated topics into digestible pieces.
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