You might be in the middle of Chapter 7 bankruptcy proceedings, but that does not change the fact that you need to drive an automobile to and from work, take your kids to school and basically get from A to B. When it comes to purchasing a vehicle while in Chapter 7 bankruptcy, however, there are several things that bankruptcy filers will want to keep in mind.
-- Review your borrowing past and pay special attention to your borrowing related to car loans. Credit lenders will focus on your credit history after your bankruptcy is discharged. If your problem relates to situationally bad credit, they will look at it more positively than if you have had habitually bad credit. As such, if you are applying for a car loan, they'll want to see what your previous auto loan history looks like.
-- Keep in mind the fact that you are a bankruptcy filer, and therefore your first auto loan following bankruptcy will likely be subjected to a higher than normal interest rate. For this reason, you may not want to spring for a luxury car. Rather, you should stick to something basic that meets your needs and get a short-term loan that you can pay off quickly. This will allow you to pay off your loan and improve your credit history. Then your next vehicle purchase can be for a luxury vehicle of your choice.
-- Consider making your down payment as large as possible. If you can put a lot of money down on your next vehicle, it will reduce the value of your final loan and that will reduce your monthly payments and interest. Since bankruptcy filers will usually be subjected to a higher interest rate, any strategy to lower that interest rate is preferred.
Chapter 7 bankruptcy is a great way to reset your finances so that you can live a more economically secure life. That said, bankruptcy does have some consequences with regard to the types of loans you can get immediately following the process. Louisville residents may therefore want to discuss all the pluses and minuses applicable to them in this regard before they initiate the bankruptcy process.
Source: autocreditexpress.com, "Should You Wait Until Your Chapter 7 Bankruptcy is Discharged?," accessed Sep. 29, 2016