You don’t want to get a car loan right after filing bankruptcy. If you can wait two years, you can get a fairly good car loan: interest in the 6%-8% range. Three years, really good: 2% to 3%. (This assumed you work hard to build up new good credit.)
You don’t want to, but sometimes there’s no choice. Maybe your car needs a $5,000.00 repair. Maybe the car is ok, but you have negative equity and a high interest rate.
Have you exhausted all your options?
Before deciding to get a car loan right after filing bankruptcy, make sure you’ve exhausted your options.
- Will your uncle give you his 2009 Pontiac? (This only works if you have an uncle who has a 2009 Pontiac.)
- Will a friend or neighbor sell you their 2005 Honda at $100 a month for two years?
- Can you save enough cash to buy a junker? (Some thoughts on buying from a private party.)
- If you have a long history of perfect car payments–even if the rest of your credit is shot–they might be willing to treat you right as a repeat customer.
So why get a car loan right after filing bankruptcy?
If you’ve exhausted your options, you might need to go ahead. You might go ahead if you like your car–but not your car payment. Or you hate your car.
If you like your car, but the payment is too high, you can redeem your car through the bankruptcy. The bankruptcy court will set a “book value” payoff on your car. And if you can finance the book value–or come up with it–then you have the car. This can make sense if you have taken good care of the car, so you know you are getting good value.
Maybe you hate your car; maybe it needs a $5000 new engine. And you need to get to work. In that case, you might end up having to finance a car.
Here are Two Companies to Consider to Get a Car Loan Right After Bankruptcy.
These companies will give you a bad loan; but maybe better than you could get from a dealer right after bankruptcy.
The first is 722 Redemption Funding. Several of my clients have used them in the past. The second is National Automotive Brokerage Service. I know less about them.
Either of those two are eager to give you a car loan right after your bankruptcy. It will be a bad loan–a high interest loan. But probably not as bad as what you’d get right after bankruptcy from most dealers.
If you want to redeem you car, 722 makes those loans. (I don’t think NABS does.) If you want to buy a car, shop both.
PS Keep Your Eyes Open
Right after bankruptcy, you are vulnerable to scams. People will tell you they are doing you a favor while they are robbing you blind. So double check everything and read carefully. (And tell me what works for you and what doesn’t; so I can give better advice in the future.)