Buying a Car After Bankruptcy Part 2

Buying a car after bankruptcy can be a challenge and it can be done. In Part 1 we discussed buying a car for cash. For some of you, this may not be an option.

If financing is the way for you to go, here are some options to think about. Keep in mind that any financing that you do will be easier and you will get a much better interest rate once your discharge is one year old. Before that, expect to pay more. Again, be careful not to get in over your head.

Credit Unions

Credit unions are a great way to finance your vehicle and they may be able to help you buy a car after bankruptcy. They offer great rates and really good service to their members.

I used to think that I needed to be a teacher or be a member of a group to be able to join a credit union so I never considered joining one. I have learned that there are all types of credit unions.

The city that I live in has a credit union and I just need to live in this city to join.

It was an awakening for me. My credit union even has a car shopping service. I tell them what I want and they go out and find the best deal. They will even go and pick up the car, so I never even have to go to the dealership if I do not want to.

Your Local Banker

If you have been banking at the same bank for a long time, this may be a place to get your vehicle financed. Talk to your banker and let him know that you are trying to buy a car after your bankruptcy.

If you have been current on the payments for the credit that you have and if your discharge is getting on up to a year, this could be a good option.

If you are just discharged, you may need to get a co-signer. Talk to your banker and ask what it would take for the bank to give you a loan. If a co-signer would help you to get the loan and you know someone who would do it for you, then go ahead. Just make sure you are not getting in over your head.

Dealerships

As I stated in Part 1, I bought a Subaru from the dealership and also the Ford Escort from a dealership. I do not recommend dealerships - and I do not need to go into detail why. I think most of you already know.

However, sometimes things just work out and it is always worth a try if you have the fortitude and stomach for it. In other words, don't take them too seriously and have some fun with it. Know that they are trying to get the best deal for themselves and will hurt you and lie to you to get that.

If you are dealing with a dealership, remember to always stay focused on the price of the car. They will entice you with low payments by stretching the length of the loan, but it won't be to your advantage.

Know the price of the car before you go in by shopping online. Know what you are willing to pay and what you are willing to pay in finance charges.

Online, Bad Credit Loans

When you are buying a car after bankruptcy, and your credit is still "bad", you may be tempted to use companies that deal with bad credit (credit score below 650). I would suggest that you apply one time to a company that finds loans for anyone with bad credit. What they do is look for loans from companies that specialize in bad credit car loans.

You will need to have a job (income) and you will pay a higher interest rate and may need to put more money down. The reason you want to apply one time is that every time you apply and get rejected, the rejections go on your record and will actually lower your score. Always do your homework and read the fine print. Know what type of loan you are getting and what all of the terms are.

Once you have your loan and you have started to turn your credit around by making your payments on time, you can refinance your loan for a better rate.

Be very careful and make sure that you can afford to get this loan. Ask yourself if you really need this car - can you find a less expensive car that you can pay for with cash?

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