Understandably, you may be nervous about getting a new car if this is your first major purchase since filing for consumer bankruptcy. However, after your debtor education course, you may believe you have the financial management skills necessary to take on this new monthly payment. After all, you may require a car to commute to and from work, so it can be seen as an investment in your steady income resources and overall financial stability. Without further ado, please continue reading to learn what considerations to make before buying a new car and how an experienced Rockland County bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq., P.C., can help you handle significant financial decisions like this post-bankruptcy.
How long should I wait after bankruptcy to buy a new car?
First of all, timing may be everything when it comes to buying a new car during or after your bankruptcy proceedings. If you specifically pursued Chapter 7 bankruptcy, your eligible debts may be discharged within four to six months of your case’s close. Once this discharge occurs, you may immediately seek auto financing.
As for Chapter 13 bankruptcy, you may apply for an auto loan during your three- to five-year repayment plan, but only after you are granted the court’s approval. This is because any new debt, especially a significant one like this, may heavily influence your plan’s budget and overall feasibility.
For both Chapter 7 and Chapter 13 bankruptcies, the longer you can wait, the better. This is because the more recent your filing was, the riskier you may appear in the eyes of auto loan lenders. Plus, with time, you may slowly build back your credit score. This is to say that extra time may improve your chances of getting offered more favorable interest rates for your auto financing.
What other considerations should I make before purchasing a new car after bankruptcy?
Even if you believe the timing is right, you must brace yourself for the interest rate offers you may receive with a consumer bankruptcy case in your history. Generally speaking, subprime auto lenders, who provide loans to individuals with low credit scores, may ask for interest rates that exceed 20 or 25 percent.
You may have better luck acquiring a loan from a credit union, which typically gives interest rates ranging from 10 to 20 percent. Do not be afraid to apply with multiple lenders within a short window, as this may actually do less harm to your overall credit score.
At the end of the day, though, your legal representative may step in to review all your offered auto loan contracts. They may work to ensure that lenders are not taking advantage of you and imposing illegal fees or usurious lending tactics without your full knowledge.
You should not let the pressure of handling your finances correctly post-bankruptcy rest solely on your shoulders. Please allow a skilled Rockland County bankruptcy attorney from The Law Offices of Allen A. Kolber, Esq., P.C., to assist you through your financial strategy. We look forward to helping you build a budget and such. Give us a call today.
