Do I have the right to purchase a vehicle in the event of a Chapter 7 bankruptcy? Advertiser Disclosure Advertiser Disclosure We are an independent, advertising-supported comparison service. Our goal is to help you make better financial choices by providing you with interactive financial calculators and tools that provide objective and original content. We also allow you to conduct research and compare data for free and help you make financial decisions with confidence. Bankrate has partnerships with issuers such as, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. How We Earn Money The offers that appear on this site come from companies who pay us. This compensation can affect the way and where products appear on the site, such as for instance, the order in which they may appear in the listing categories in the event that they are not permitted by law for our mortgage, home equity, and other home lending products. This compensation, however, does have no impact on the information we publish, or the reviews that you read on this site. We do not cover the entire universe of businesses or financial deals that might be open to you. SHARE Maskot/Getty Images
2 min read Published March 31, 2022
Writer: Jerry Brown Written by Contributing writer Jerry Brown is a contributing writer for Bankrate. Jerry writes about home equity, personal loans and auto loans as well as managing debt. Written by Rhys Subitch Edited by Auto loans editor Rhys has been editing and writing for Bankrate since late 2021. They are committed to helping readers gain confidence to control their finances through providing clear, well-researched facts that break down complicated subjects into digestible pieces. The Bankrate guarantee
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So, this compensation can impact how, where and in what order products are listed and categories, unless it is prohibited by law. This is the case for our mortgage, home equity and other products for home loans. Other factors, such as our own rules for our website and whether or not a product is offered in your region or within your own personal credit score may also influence how and where products appear on this site. We strive to offer the most diverse selection of products, Bankrate does not include details about every credit or financial item or product. If you file for Chapter 7 bankruptcy, it may remain on your credit file for up to 10 years from the date of filing. During this period it is possible that you will need to buy a car. While it’s more difficult, you can get an auto loan in the event of bankruptcy. In order to compensate for the greater risk that comes with bankruptcy, a lender could offer a greater interest rate or require a larger down amount. Should I purchase a vehicle following bankruptcy? The answer depends on your financial circumstances and transportation needs. Affordability: Any car you buy must be within the budget. Make sure it’s by not only the cost of the car. Your current transportation: If you already use reliable transport, it could be better to put off purchasing a car. Your interest rate is likely to be less than ideal when bankruptcy is still on your credit report. Cash: Avoiding the possibility of a car loan prior to the bankruptcy being removed from your credit report could be the best choice. If you pay cash, you can avoid the loan entirely. Three methods to finance a vehicle using an auto loan after bankruptcy When trying to finance your vehicle with an auto loan after bankruptcy, you could have an issue in getting a lender and some may resist working with you. Also, once you find a lender willing to let you borrow money, it is likely that you aren’t eligible for the . 1. Pay-here and Buy-here dealerships your search, you could find buy-here and pay-here dealers which don’t need credit checks. Although these dealerships will assist you in the event that you went through bankruptcy, you could end with a bill that is higher than what the vehicle is worth. Before you make a decision make sure you do your research and ask about hidden charges. 2. Credit unions If one of them , you could try applying to get an auto loan there. Since credit unions are not for-profit, member-owned organizations which means you’ll have more chances of securing financing. Plus, you might be able to secure an interest rate that is lower. 3. Co-signer If none of those options work, an alternative would be to find someone with good to excellent credit rating to sign an auto loan to you. Before you do this, explain to the person . If you default on your loan the co-signer will be accountable for the debt, and it could negatively impact their credit. When you should buy depends on your financial situation. Although the ideal time to buy your vehicle varies based on your financial situation, the is when you will get the most favorable bargain and rate. The delay to see if your credit is improved to buy a car may reduce the interest rate that a lender gives you. However, if you aren’t waiting and need transportation immediately, look for the lowest price. Because of the pandemic the car makers were forced to shut down their factories for months and saw sales and inventory fall. If you’re in the market for an automobile, you might want to to circumvent the lack of new cars. However, be sure to do your research and don’t purchase a vehicle you can’t afford. The bottom line is that while you are able to buy a car following bankruptcy, you should be prepared to pay more interest if you take out an loan. Although waiting for your credit score to improve could lower your rate but it’s not always possible. Examine all of your loan options before you take out an loan. Take advantage of available dealer incentives and try to stay clear of dealerships that have hidden charges. Find out more about:
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Written by the writer who contributes to the project. Jerry Brown is a contributing writer for Bankrate. Jerry writes about personal loans, Auto loans and managing debt. The article was edited by Rhys Subitch Edited by Auto loans editor Rhys has been writing and editing for Bankrate from late 2021. They are passionate about helping readers gain confidence to take control of their finances by providing clear, well-researched details that cut otherwise complex topics into manageable bites.
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