Buying a Car After Bankruptcy Not Hopeless


Plenty of Options to Secure a Loan

Just because you’ve had a run of bad luck and had to file bankruptcy doesn’t mean you have to drive that old jalopy for the next 7 years. If you’ve recently had your bankruptcy discharged, chances are you’ve received offers in the mail from car dealerships like the ones in the Chapman Arizona group. They know that bad things sometimes happen to good people and the chances of you defaulting on another loan are slim. Financing through the dealership is one of the options at your disposal.

Lay Your Cards on the Table

When you visit a car dealership, there’s no need to be embarrassed about your financial problems. To save everyone’s time, it’s important to be upfront about your credit history so the finance department can work with appropriate lenders. Although your financial problems may not have been your fault, you will have to pay a penalty for defaulting on loans in the form of higher interest rates. Subprime lenders consider issuing a loan to someone with a low credit score a higher risk, and they charge extra fees to help make up for that risk. The good news is that even though your loan interest rate may be high, once you’ve made the payments on time for a couple of years you should be able to refinance the loan at a much lower rate. This is a great way to start rebuilding your credit after a bankruptcy.

Avoid Buy Here, Pay Here if Possible

Unless you absolutely can’t get financed anywhere else, it’s a good idea to avoid the “buy here, pay here” car lots. At these independent dealerships, your down payment is typically all the car is worth. You’re then stuck making high interest payments for several years on a car that may be well past its prime. Cars in this category typically have well over 100,000 miles on them, with little or no warranty. Make the self-financed auto lot your last resort.

Save a Down Payment, Have Proof of Income

When you go to finance a car following a bankruptcy, lenders are typically going to ask for at least 10 percent of the purchase price down. You can frequently “buy down” the interest rate by putting more money down. You’ll also need to have proof of income in the form of pay stubs or W-2 statements. Lenders also may ask for personal references, so it’s handy to have at least six of those jotted down on a piece of paper. Reputable dealerships like those in the Chapman Arizona group do not judge you based on your financial history. Their goal is to get you into some reliable transportation that you can pay off as you work your way out of your credit problems.

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