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Driving Off with Bankruptcy Auto Loans

John McMalcolm

June 30, 2014

Many people think that it is impossible to get an auto loan during or after bankruptcy, but this notion is incorrect. Bankruptcy auto loans are difficult to come by, but they are nonetheless available.

There are lenders that are willing to provide loans to people who are in bankruptcy, but they usually charge higher interests and fees for such loans.

Whether you are going through Chapter 7 or Chapter 13 bankruptcy as a regular individual or a small business owner looking to start or add to a company fleet, you can increase your chances of getting an auto loan by following the tips below….

Choose the Right Time

If you are undergoing Chapter 7 bankruptcy, you should only start applying for an auto loan after you have attended the 341 meeting where your debts and assets will be examined by a trustee.

Most loan providers will not consider offering loans to people in bankruptcy until they have completed this procedure.

If you have filed for Chapter 13 bankruptcy, it is advisable that you wait until your initial budget of debt repayment is set up before you apply for an auto loan.

Get Permission

Whether you have filed for Chapter 7 or Chapter 13 bankruptcy, it is essential that you seek permission from the court first before you decide to purchase a vehicle.

If the trustee or judge finds out that you have bought a vehicle without his or her knowledge or consent, you may be asked to surrender the vehicle. The trustee or judge may also cancel the bankruptcy proceeding, which can result in more problems.

Find the Right Lenders

After getting permission to buy a vehicle, you should do some research to find out what you need to know about bankruptcy auto loans.

Then, with a better understanding of this type of loans, you can proceed to look for the right loan provider. Shopping for a bankruptcy auto loan is no different from shopping for an ordinary auto loan, but you should make a point to focus on finding specialized lenders.

Lenders who specialize in providing auto loans for people in bankruptcy have the necessary knowledge and experience to ensure that the loan process will go smoothly.

They can also provide useful advice to help you make the right decision. Get quotes and other information from several reputable bankruptcy auto loan providers and compare their rates, fees and terms to determine which one offers the best deal.

Select the Right Car

When you purchase a vehicle while you are in bankruptcy, it is best that you select one that is reasonably priced.

Your lender may require you to buy an inexpensive car to ensure that there will be enough collateral to cover the entire loan amount. If you wish to buy an expensive vehicle, you may have to pay a larger down payment.

If the trustee or judge knows that you have enough money to pay a large down payment, he or she may disallow the deal and ask you to use the money to pay off your existing debt.

Getting an auto loan while you are going through bankruptcy can be a challenging task.

Take all options into consideration and consult your bankruptcy lawyer to find out which is the most suitable alternative for you.

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