Loans
Auto Loans after Bankruptcy - Should You Finance a New or Used Car?
Deciding whether to purchase a new or used car is a big decision, especially if you have just filed a recent bankruptcy. Of course, the decision is largely based on how bad you need a vehicle. There are valid reasons for financing a new or used car after bankruptcy. On the other hand, there are also numerous reasons to delay the car buying process. Before applying for an auto loan, carefully consider whether now?s the right time to finance.
When Was the Bankruptcy Discharged?
Once your bankruptcy has been discharged, you are free to finance an auto loan, mortgage, or acquire a credit card. However, you will incur huge finance fees or interest. For the most part, financial experts recommend waiting at least six months to a year before financing a large expense.
The interest rate you receive on an auto loan immediately following a bankruptcy will be approximately three percentage points higher than the average loan. This will significantly increase your monthly car payment. To avoid high fees, wait until your credit improves.
Have You Established New Credit Accounts?
After a bankruptcy, it is vital to establish new credit accounts. Bankruptcy gives you the opportunity for a fresh start. Thus, you should apply for new credit cards, department store charges, gas cards, etc. The only way to improve your credit score after bankruptcy is to open new accounts and maintain regular payments. In time, your score will rise, which justifies a better rate on your auto loan.
Choosing an Auto Loan Lender for New or Used Car
If you decide to purchase a new vehicle, the next step involves selecting the right lender. There are quite a few options available. You can obtain financing through a new or used car dealership, or you can secure your own financing. If possible, compare rates from at least three to four money sources. Contact your bank or credit union and inquire of their rates. Notify the lender of your current credit status.
In most cases, you will have to secure financing through a sub prime lender. Some traditional auto loan lenders may offer these types of loans. Another option involves taking advantage of online auto loan brokers.
Brokers will thoroughly assess your credit application, and match you with various lenders. Next, the broker will email you quotes from these lenders. You pick the most desirable loan package.
View our recommended Car Loan After Bankruptcy lenders.
Carrie Reeder
Tags: loan, loans, student loans, consolidate student loans, auto loans, personal loans, refinance loans, Similar articles
Auto Loan - How to Get Approved for a Bad Credit Car Loan
Auto loans are easier to get approved for than other, unsecured lines of credit because they are secured by the car you purchase. So, even with bad credit, it? Read more →Auto Loan Deals Are Not Always As Sweet As They Seem
Choosing the right auto loan is an important financial decision, and one fraught with potential risks for unwary credit consumers. Anyone planning to take out a loan to buy a new or used vehicle should shop around for the best deal, read the fine print on any loan plan they are considering taking up, and most importantly of all, be very honest with themselves about how much car they can really afford to buy. Read more →Auto Loans And Finance For All!
?We don?t just tell you it works, we work it out!? ?We don?t sell cars, we build relationships?- Heard that before? It?s probably from one of the many car loans and finance companies that dot the globe. Read more →Auto Loans For Those With Less Than Perfect Credit
Direct Financing The direct finance business works as a good credit auto loan would from your local bank, except borrowers with bad credit will be expected to bring in a larger down payment and pay a higher interest rate. Read more →Aphorism
An investor who has all the answers doesn't even understand the questions (March 1994)
John Templeton