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I need to buy a car pretty soon

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  • I need to buy a car pretty soon

    I haven't been discharged yet (Chapter 7), but my car is having issues that would cost more to fix than it is worth (head gasket issues, car is over 10 years old). I know I will need to buy a car shortly after discharge. I have been getting lots of letters about getting a car loan, but I don't want to get scammed. What is the best way to get the best rate possible after a bankruptcy?


  • #2
    They are not scams inasmuch as they know that you can't file bankruptcy again. There is no way to tell your auto-enhanced credit score until you go to apply. I would expect, without a discharge and close, that your scores are in the tank and that your interest rate will be high and may even require a significant deposit.

    You can shop those companies and ask them questions or research them individually. There are so many automobile dealerships out there that any number of them will try to get your business. You'll probably not like the rate. It's usually better to get a new car before filing if your credit is decent and you can get single digit rates.
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog

    I am not an attorney. Any advice provided is not legal advice.


    • #3
      Originally posted by justbroke View Post
      They are not scams inasmuch as they know that you can't file bankruptcy again.
      I am going to respectfully disagree. Most of the offers for auto financing which you will receive--especially before discharge--really are scams, precisely because they know you can't file again.

      As soon as I filed for Chapter 7 bankruptcy, my mailbox began to fill with offers for auto financing from various dealers and lenders. Prior to discharge, the overwhelming majority of these were from sleazy "buy here pay here" type dealers, which are known to sell overpriced old cars with high-interest financing. Of course, I received a few offers from legitimate dealers, but those were few and far between. After discharge, then I started to receive offers from the local Chrysler dealer, Kia dealer, Ford dealer, and Chevy dealer.

      Also, the decision as to whether or not you should repair an existing vehicle or buy a different one should not be based on whether or not the repair costs exceed its current Blue Book value. The decision should be based on mileage, overall condition, and probability of future problems. You say your current car is having "head gasket issues". Has this been professionally diagnosed, or is this just someone's guess? While I probably wouldn't pay shop prices to do a head gasket on an old car (typically $1500-$1600 around here), there are other easier, cheaper-to-repair problems which are often mistaken for a failed head gasket. For example, some cars have intake manifold gaskets which fail, causing many of the same symptoms.


      • #4
        Originally posted by bcohen View Post
        I am going to respectfully disagree. Most of the offers for auto financing which you will receive--especially before discharge--really are scams, precisely because they know you can't file again.
        My artful wording of "inasmuch as they know that you can't file bankruptcy again" may not have hit home the way I intended. If they are actually trying to get you into a ridiculous rate with large down payment, that's bad; but it doesn't make it a scam. I could actually be wrong albeit my experience was different and not one of my offers was a "buy here pay here." All of my pre and post-discharge "offers" were from local original manufacturer dealers (Ford, Chevrolet, Kia as I can recall).

        I always think of a scam as believing that I'm dealing with a legitimate business and later finding that I'm dealing with a "scam" business which took my money and didn't provide the product that we agreed on or provided an inferior product.

        In any event, maybe I should have used stronger language and say that I don't necessarily endorse these. I think one should wait for 6 months, if they can, to earn a better credit score. I went through my credit union at 7.49% after waiting for 6 months. You know, I had to get rid of my scam 722 Redemption loan, from US Bank, that was 19.750% ;) (I say that in jest.)

        Okay, here it is again...

        They are not necessarily scams. While there will be legitimate offers, all of these businesses send their offers knowing that you can't file bankruptcy again for some period of time. The interest rates, cash deposits, and types of available vehicles may vary between dealers. You will need to sift through the noise. Wait, if you can, for single digit rates. I waited 6 months to refinance a 722 Redemption loan which had a 19.750% rate.
        Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
        Status: (Auto) Discharged and Closed! 5/10
        Visit My BKForum Blog: justbroke's Blog

        I am not an attorney. Any advice provided is not legal advice.


        • #5
          If you can wait until after discharge, but need to get an auto loan before you have re-established credit via started/secured accounts, I would consider Capital One Auto Finance. As much as I hate Capital One, I do like that their website allows you to get preapproved without a hard inquiry.

          If you get declined or are unhappy with their offer, your credit won't be impacted.

          As far as offers, I also received offers from franchise dealerships. They were usually misspelled flyers from car salesman who claimed to be "credit experts" and had special "VIP programs" for bankruptcy filers. What a VIP program is for someone who files bankruptcy is beyond me. Perhaps bankruptcy filers are VIPs because they make more money off the auto loans due to the higher rate.


          • #6
            I recently had my 341. Would it be better to just buy a car with cash and then wait 12 months in order to get a better car? I will be able to pay $7-$8k for a car. One dealer told me you get better deals before discharge, but of course anything they say I take with a grain of salt.


            • #7
              My credit score was about 530 before I filed, now it is 558.


              • #8
                Originally posted by leonel9 View Post
                If you can wait until after discharge, but need to get an auto loan before you have re-established credit via started/secured accounts, I would consider Capital One Auto Finance. As much as I hate Capital One, I do like that their website allows you to get preapproved without a hard inquiry.
                Thanks for that info. I tried them just now, wasn't able to get preapproved.


                • #9
                  I am currently in Chapter 13 and just had to get a car while still under the 13 umbrella. Here's what I did, I went to the dealership, told them my situation (and gave them my approval from the judge - you won't have to do that), and they proceeded to try to get me financed through about ten different banks/finance companies. Someone finally approved me and I was able to get the loan and car. The rate wasn't as bad as I thought it would be. If you want to message me, I'll tell you who financed me, my credit score, and rate.


                  • #10
                    I think that the banks have figured that car loans is where money to be made, so that's where they have been emphasizing; I get e-mails & letters from CapitalOne all the time to entie me to buy a new car (I have a few CCs and a bank account with them).

                    Now as for the outlook for cars, I would try and stay as far away from a new car as possible. The glorious future of the driverless car will soon be upon us, thereby completely upsetting the current paradigm of the necessary ownership of a car (i.e., at least for everyone not living in a super-urban, super-expensive place like Manhattan) as firms like Uber will be able to offer rides at the net cost in line with the cost to own a car (i.e., currently, they have to pay that darned human driver!), so that there will be no financial benefit for someone to have his own car. (That said, with old cars being cheap, for a while at least, there might be a cost-advantage to own & operate a beater.) The value of a car will drop by at least the amount needed to retrofit the driverless technology, and probably a lot more.

                    As for myself, I have a beater with 170K miles (the same one that survived Chapter 7 many year ago ), and being that I am "early retired" now, I don't use it much, and indeed as I also live next to a Wal-Mart and my ACA Medicaid expansion provides transportation to health care visits, I really don't need a car! I have dispensed with collision/comprehensive insurance, and if my car gets wrecked, I'll just be carless! (If I happen to entertain a lady, she'd have to drive to pick me up! )


                    • #11
                      My discharge should be in about two weeks. I got 3 secured credit cards, and my score is going up. Hopefully it will help get me a decent rate. I will try to hold off until late in July, as they want to get their quotas in. I am not going for a new car, but hopefully one that still has the manufacturer warranty.


                      • #12
                        I think this talk about "driverless" cars is, and will always be a pipe dream. I do not think people are as eager to entrust their safety to a computer as you believe, nor do I think most people want to let the car decide where to take them. Regardless, there will always be demand for regular cars, and you cannot let concerns about the far-distant future influence your decision today.

                        I do agree with one thing you wrote--that it's cost-effective to own and operate a beater. Unless it becomes a major lemon, it's almost always much cheaper to keep an old car running than to buy a newer one. Especially if you do most of the maintenance and repairs yourself, like I do. I have done a lot of engine mechanical work to my Caravan in the past 6 months, which a professional mechanic would have easily charged over $2000 for. My cost: less than $500, because I bought the parts online and did the work myself.


                        • #13
                          I might wind up needing a car in the next year or two, as mine is getting up in age.
                          To me it almost seems as if it might be better to buy a newer "old" car with cash if possible. Although I'm not a "motor-head" who can fix my own car, it seems that the newer models are all so technology-heavy that you need big time bucks and a dealership just to fix the simplest things. Car salespeople are vultures, and I don't want to end up owing more than the car is worth.
                          My car has those automatic locks and windows-- I sincerely wish I had the old fashioned kind where you could unlock every individual door with a key or one that had windows that could "roll down". Just to fix the locks would cost $400 a piece. God knows how much the windows would cost. It stinks because I can't open two of my car windows AT ALL, and I constantly trigger my theft alarm by unlocking my driver's side door with a key before hitting the "unlock" button on my key remote.
                          I am in my 30s, but I'm starting to COMPLAIN about technology non-stop, as if I were an old woman. Everything seems to be made to be "disposable and un-fixable" nowadays. Technology progresses so quickly that you have to go broke just to keep up with it. You have an old computer printer that's broken? "Sorry, gotta throw it out and buy a new one", and this is **exactly why** so many people end up over their heads in debt. Many banks and companies DEMAND that their customers use computers, some even charge extra for paper billing. Even the poorest schmuck needs access to a computer that works, and they become obsolete so quickly that it's insane. God forbid if you get a virus-- fixing the thing would cost more than it's worth.


                          • #14
                            The talk of self-driving cars has reached the same pitch as the talk about all-electric and hybrid cars the last time I was in the market. I had one person tell me that gas stations would be obsolete by 2015 as electrics took over. Yes, there are quite a few around, but the VAST majority still run on old-fashioned dinosaur juice.
                            This post does not constitute legal advice. If you use this advice instead of that of a lawyer, God help you.
                            Filed CH 7: 5/11/17 341: 6/12/17 Discharge: 8/14/17


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