Can I get a Car Loan during my Chapter 7 or Chapter 13 Bankruptcy?
If you need to buy a car, and don't have the cash to pay for the entire purchase price of the vehicle upfront, a car loan is usually your only option. An open bankruptcy that has not yet been discharged can often make buying a vehicle extremely difficult. In fact, most people believe that it is impossible to purchase a vehicle before a bankruptcy is discharged. While it is difficult, it is not impossible. Regardless if you are involved in a Chapter 7 or a Chapter 13 bankruptcy; you may still be able to obtain an auto loan to purchase a vehicle, pay the state sales tax, and even finance additional warranty and insurance products. There are a small handful of lenders that make bad credit loans to people in the middle of a bankruptcy. Prestige Motor Works, is one of the few used car dealerships that has the lenders, and the ability to help you finance a vehicle while you are still in a Chapter 7 or even a Chapter 13 Bankruptcy. So, the short answer is YES, you can purchase, and even finance a car while in the midst of a Bankruptcy.
What Kind of a Car Loan Can I get if I filed for Bankruptcy?
A vehicle loan that is obtained while you are in the bankruptcy process is no different than a traditional car loan. The application, approval, and underwriting process is very similar to that of a "traditional" car loan. However, you should expect to pay higher interest rates, and typically lenders require higher down payments. If you are in the process of filing for, or proceeding through a bankruptcy, you can expect to pay interest rates in the 17%-24% range. Most importantly BE REASONABLE when choosing a car. If you are lucky enough to contact a dealership that can process a loan while you are in bankruptcy before your bankruptcy is discharged, AND you find a lender willing to provide a loan for the vehicle, you should be flexible about the type of vehicle you purchase. You should not expect to be driving the most expensive luxury vehicle on the lot. Often times the courts and the bankruptcy trustee require that car you purchase be priced low enough where the lender has sufficient collateral in the vehicle to completely cover the amount financed and the bankruptcy trustee does not feel like you are taking advantage of the courts. If you want to purchase a more expensive type of vehicle ($20,000+), you’ll probably be required to come up with a substantial down payment.
What kind of a Down Payment do I need to purchase a vehicle if I recently filed for Bankruptcy?
Down payments vary depending on a customers individual situation, salary, job stability, housing stability, vehicle age, mileage, and reliability, as well as others. At Prestige Motor Works, the current average down payment for customers that are in a bankruptcy status is currently $1,800 to purchase a $10,000 vehicle.