financing auto loans after bankruptcy
BANKRUPTCY IN A NUTSHELL
The Bankruptcy code set out procedures for dealing with people that have problems repaying their debt. When a person finds it difficult to repay his or her debt, bankruptcy happens to be their final resort. Bankruptcy is the process of relieving one of his or her debt. One can file for bankruptcy under any of the following chapters of the bankruptcy code; chapter 13, chapter 7, chapter 11.
Chapter 7 is based on debt liquidation while chapter 13 is based on debt repayment and reorganization. Chapter 11 takes care of the corporate bankruptcy.
Bankruptcy is certainly not the best option for people to follow. But, that is the way many do follow. There are negative psychological effects of bankruptcy that tend to affect all that a bankrupt person does – including getting loans for your car/ autos. But, that was then. Getting a car loan after bankruptcy now is even easier than getting a personal loan after bankruptcy. The reason is that your car will be used as collateral the case of any default. In fact, getting a car loan will even help boost your credit score immediately after bankruptcy.
This article is written to give you tips on how to get auto loans after you have been declared bankrupt and discharged.
GETTING AUTOS/ CAR LOANS AFTER BANKRUPTCY
Before you run to your bank for another loan, take time to ensure that the steps recommended in this hub are followed.
Identify suitable loans; the first thing you will have to do is identify car/ auto loans with the least interest rate. Though the initial interest will be higher nut after six months of being declared bankrupt, you qualify for lower rate. Make sure the loan provider have this in their loan agreement. This is to help you avoid falling into the same ‘interest rate’ trap that led to you being declared bankrupt in the first place. The amount loan that you can get, the term of the loan (repayment period) and the flexibility of the loan are factors that needs to be seriously considered before taking out the loan. A word of caution; never lag in your monthly repayment of your loan and the resulting interest. Remember that car loan after bankruptcy is a valuable asset that is meant to make you bounce back on the right financial track. So, don’t mess with it.
Choosing a suitable car; care need to be taken in selecting a car in order not to raise eyebrows. People will naturally think there is something hidden when you opt for expensive car a short while after coming out of bankruptcy. Cheap cars should always be your choice at least in the meantime.
Apply for the loans. Once your bankruptcy case closes, you can apply for a car loan but you need to first of all take care of your credit score. A lot of people make the mistake of not including the fact that they have been declared bankrupt. This is a wrong way to go, be bold to attach a report to your car loan application explaining what led to you being declared bankrupt. This will significantly improve your chance of getting the loan as you will be seen as a honest and transparent person (note that the loan company must find out whether you include it or not). So, be smart to do that first, did you get that? Good. Go through your credit report thoroughly before submitting it as there maybe no second chance for amendment. I have seen cases where credit card companies forgot or intentionally did not close accounts that have been declared bankrupt.
Who can help me in getting a car loan after bankruptcy?
Though you can apply for the loan directly but your life will be a lot easier if you avail yourself the opportunity of choosing car loan agencies. There are many agencies whose specialty is helping people that have been declared bankrupt get a car loan (I suspect they are being financed and supported by car manufacturers). You can use the online loan service companies. An online auto loan service company distributes your application to a large network of car/ auto loan providers who will now contact you ultimately. Note that multiple responses will come your way after your application so feel free to select the one of your choice bearing in mind that scammers (in the form of identity thieves) are everywhere. A good counter measure is to meet with the service provider before furthering.
How long will stay before I can apply for a car loan after bankruptcy?
Like I said before, you can apply for an auto loan a day after you have been declared bankrupt and discharged. But you know it won’t be easy if that right things are not done first. And the right thing that needs to be done is to improve your credit score which starts from getting your credit report.
How do I stay out of further trouble?
The only answer to that is to always make your new car loan repayment on time and keep an eye on refinancing. In other words, faithfully servicing the loan is the only way forward.
To your financial freedom once again!
More by this Author
Meaning and importance / significance of financial management suddenly found its way back into the lips, head and heart of almost all living beings. This recent development could be unconnected with the slow recovery of...
Investment appraisal or capital budgeting is the process of evaluating a project for its economic viability. Many methods of investment appraisal exist – ranging from ordinary payback period to...
It is the pride of every parent to have beautiful babies. But not all that have the knowledge of making that dream come true. A lot of people- especially women- that are of marriageable age have not yet got...