Tips For Buying A Car After Bankruptcy

Make no mistake, buying a car after bankruptcy is no easy task. One of the consequences of bankruptcy is a harder time to get a loan and when that happens, you will pay a higher rate of interest.

But don´t get me wrong, you can buy and finance a car even if you have poor credit as a result of filling for bankruptcy. The current economic slowdown will work in your favor if you plan on buying a car and financing it at the dealership.

I will be outlining some of the challenges and questions you should be asking yourself before going out an buying a new car. I will also list a few tips to help you get the best deal possible on a car loan.

First you have to understand why lenders would be reluctant to lend to you.  After all you already filled for bankruptcy once.

There are lenders that specialize in lending to borrowers with a bankruptcy filling in their record. However, you should start working on repearing your credit before you go out shopping for a new car.

You should shop for a loan with online lenders, specialty local lenders, and with the car dealership where you plan on buying your new car.

Shopping for a car loan online can be extremely convenient.  You will be able to compare monthly payments, interest rates, and different requirements from several lenders. Some lenders might require than the bankruptcy be discharged. Also, have no incidents within the previous year is also a plus. Obviously you also have to meet certain age and income requirements.

Here are some of the things you should consider doing before buying a car:

    * Increase your credit rating – Take out a collateralize credit card and make a few monthly payments. Also, make sure that this positive information is being reported to a major credit reporting agency. If possible, also try to get a small, unsecured loan from a local bank.

    * Try to get your loan pre-approved before negotiating the car purchase. This will be helpful in getting the best price possible for the car.

    * Get someone to co-sign your loan Keep in mind that this person could be held responsible if you fail to pay off your loan.

   * Negotiate the price of the car FIRST than negotiate the loan deal. Chances are the dealer pulled your credit report already. If he is still talking to you its because he can close on a loan.

Before closing the deal, check your lender with the Better Business Bureau to see if there are complaints.

Consider joining a credit union?

One other option you might consider for your car loan is joining a credit union. By belonging to a credit union you can probably qualify for above average deals on car loans. You can qualify for these loans if your bankruptcy is over one year old and you are incident free since the filling.

Consider searching online to find a credit union where you live. Fill out the online form with a few question that will help match you up with the right credit union.

Should you buy a new car?

Although buying a car after bankruptcy might be very important for you to regain your footing, don´t settle for a loan that has an excessive interest rate, or any kind of abusive clause, such as excessive late payment and pre-payment penalties.

Don´t limit yourself to looking solely at the monthly payment amount, compare the life of the loan. If you are buying used car with a few years, make sure that the term of the loan doesn´t extend beyond the life of the car.

You should ponder if buying a new car after bankruptcy is even the right thing to be doing. Can you wait a little longer? Should you buy a lower priced car?

Consider these questions one last time before starting the search for your car and loan.