The cost of buying personal transportation moves constantly upward. This has led to to a wide range of financing options by auto manufacturers in an effort to sustain sales. The result is a monthly payment of at least two hundred fifty dollars and that is just for the shrinking class of those considered creditworthy. Unfortunately, auto financing after bankruptcy is an arid landscape.
Finding the right car is most important. It should meet one’s needs–desires can come later. It should start, stop and move safely from one place to another. One should be on a constant lookout for a vehicle so that a time crunch does not force a bad decision. The vehicle should be reliable and easy to service. Affordability is paramount as a used vehicle may soon need repairs. An estate sale may yield a sound car–ask the person in charge if one is available. Ask family members and friends for suggestions. An advertisement placed in a church bulletin might be fruitful.
Finding reasonable financing is not impossible but it is difficult post bankruptcy. Decide upon a vehicle, the more reliable and less expensive the better. Put together a significant down payment–at least twenty per cent, thirty if possible. Speak to a banker, or a loan officer at a credit union. You must persuade that person you are creditworthy despite evidence to the contrary. Your proof must include paycheck stubs and tax returns. They will probably not consider a loan on any vehicle three years old or older. If successful, it will result in an affordable monthly payment.
The alternative could force one to deal with a car lot offering a single digit down payment or other lure. These “Buy Here, Pay Here” lots are a minefield for the unwary. The vehicles are used, the maintenance history spotty. The interest rate may start in the high teens and go up. In many cases, the kind of car available is based on the amount of monthly payment one can make. The car will be clean but there is no warranty and the the odometer reading may be suspect. The advice of a good, trusted mechanic is indispensable. But it is possible that with a significant down payment, the post bankruptcy buyer could qualify for financing at a dealership. The vehicles there will be less suspect, the choices more varied and the financing rate better than at a “Buy Here, Pay Here” lot.
Student car loans are easier to find at a bank or other institution but have their own hurdles. Lack of credit history may require a sizable down payment. A bad driving record may sour a deal. The less expensive, less powerful the car the better the odds of obtaining good financing. Still, though, a new vehicle price will start at ten thousand dollars, a parent will likely have to co-sign and insurance, since comprehensive coverage will be necessary, will be high. A solid pre-owned vehicle purchased with a significant down payment should be anticipated as an end result.
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