Personal Finance: How to Buy a Car After Bankruptcy

Buy a car

Bankruptcy doesn’t have to mean that you need to give up on your hopes and dreams. This is still the case when considering your car buying options after a bankruptcy. Though the process will be a little different than it would have been prior to your bankruptcy, you can still drive away with a great car.

Auto Loan

Step one on your journey to automobile ownership is to shop around for an auto loan. It is tempting (particularly after a bankruptcy) to just accept the terms offered by the first lender that will work with you, but resist the urge to do that here. Keep searching for the best rates you can get. The better the interest rate, the lower your monthly payment – and the more likely you are to be able to pay off the entire loan eventually (which will be very helpful to re-building your credit score).

When searching for lenders who will work with you, steer clear of mega banks and try to speak to local credit unions. They will be much more flexible and willing to help (even with the black mark on your credit).

Finding a Car

Speak to friends and family to find out who the more reputable dealers are in your local area. You will want to avoid most of the “Buy Here, Pay Here” car lots as their vehicles and financial practices may not be up to the same level as that of an established dealer. More financial problems are the last thing you need right now.

Once you have found a reputable dealership to work with, you will want to stay modest with your vehicle expectations. You won’t want to purchase a brand new $50,000 car. Instead, try to stick with their used car options – ideally below the $20,000 range. Avoid adding any unneeded upgrades to the vehicle, use the loan you negotiated with the credit union to pay for the car, and enjoy your new ride.

Though a battle with bankruptcy can seem like the end of the world, it doesn’t have to be. With a little planning and persistence, you can still have an awesome car at a great price.

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