Buying a Car After Bankruptcy

Help buying a car after bankruptcy discharge

While a case is pending, especially under Chapter 13, purchasing a new automobile may compromise the plan and result in increased payments. However, buying a car after bankruptcy is fairly easy when following a few simple, common sense guidelines. Since the early 1990's, most large car dealers recognize few potential customers present excellent credit ratings, and further, the number of applicants with a prior discharge grows larger each year. In the most basic sense, creditors realized that after discharge, relapse into another case is highly unlikely as compared to the general pool of ordinary applicants.

Factors to consider buy shopping for cars and financing

Whether purchasing a new car makes sense depends upon purpose and necessity. In most cases, cash reserves and liquidity are a primary concern during the weeks following a final discharge. Nevertheless, buying a car after discharge may be a high priority for work and family. Rather than jumping in with excitement, take your time. Shop competitively. Compare prices and overall cost for interest and charges, and make sure notes represent a bona fide value. Because of the discharge, you should expect:

  • interest rates will be higher.
  • down payments will be higher.
  • terms in years should be approximately the same.

Following a discharge, most debtors remain in a precarious financial condition for a period of months. In the best cases, with steady monthly savings, purchasing a new automobile to commute to work is the single best investment available. Peace of mind - reliability - and the pride of ownership while providing for family needs. Higher purchase costs may be offset many times over by these intangible benefits.