After filing for a chapter 7 bankruptcy,it might remain on your credit report for up to 10 years. During this time, you may need to consider buying a car. When doing so, you should expect to make a larger down payment and pay a higher interest rate.
Should you consider buying a car after a Chapter 7 bankruptcy?
You should take your transportation needs and financial circumstances into consideration here. Do you have reliable transportation? If so, maybe you should wait to buy a car when the interest rate is better. Regardless of your answer here, you need to be certain that you can afford to do so. Make sure to calculate the cost of ownership, not just the sticker price, when deciding whether buying a car is a good decision.
How will you be able to finance your vehicle?
It’s more challenging to get a car loan after you’ve filed for a chapter 7 bankruptcy. You’ll struggle to find a lender, and even when you find a lender, you won’t qualify for a favorable rate.However, if you’re willing to deal with high-interest rate loans, you can check out one of these places to see about buying a car:
- Buy-Here, Pay-Here Dealerships are something that most people are familiar with today. These dealerships don’t base your car purchase on your credit rating, so they’re more than happy to work with you. However, you need to be cautious about buying your car here since you’ll typically find yourself paying more than the car is worth due to all the fees you’ll be required to pay.
- Credit Unions are another option if you belong to one. You can apply for a loan through this member-owned, nonprofit organization. Doing so typically makes it easier for you to secure a loan with a decent interest rate.
- A Co-Signer is another option that you may want to take into consideration. For this, you’ll need to have someone with really good credit sign the loan with you. Prior to doing so, make sure that your co-signer understands their rights and responsibilities. This is important because if you default on your loan,your co-signer is responsible for making the payments. Missing these payments will have a negative impact on their credit.
When should you consider taking out a car loan?
The best time for buying a car depends largely upon your financial situation. You should never hurry into doing so, though. Instead, take some time to look for the best interest rate possible. This may require you to wait a while after your chapter 7 bankruptcy is finished since doing so will help reduce your interest rate. When you can’t wait for a while, you’ll need to spend some time doing your due diligence and shopping around instead of hurrying to make your purchase.
You should also take note of the fact that not only will your chapter 7 bankruptcy impact your purchase but so will the pandemic. This is because, throughout it,some car manufacturers were forced to close their factories for an extended period of time. Unfortunately, this led to a decline in their sales. So, if you need a vehicle right away, you should shop for a used one. Of course, this is also true if you don’t think you’ll be able to pay back a car loan.
What it all comes down to is this…
When buying a car after your chapter 7 bankruptcy, you should expect the interest rate to be higher. If you wait, your credit rating will increase over time, but that isn’t always an option. For help with determining what’s best for you, contact us at the Weller Legal Group in Clearwater, FL.