Advise on auto loans..

[stacey31778]

Hello!

I filed chapter 13, and have started making payments. Now, I'm in need of a new car (engine is going and not worth the $$$ in repairing). I would like to purchase a pre-owned car about three or four years old and finance $10,000 or less. I plan to put money down, plus what I will get for current car. I spoke with my attorney, and she told me she will have to file a motion to incur debt. I was looking into carmax. Any advise on auto loans? Its seems like there are some shady financing folks out there. Thanks.

[StartingOver08]

My advice: IF you are going to incur financing - get your financing from a CU if at all possible. Line up your financing before you go to a dealer.

Buying a car is three separate transactions: 1) Selling your vehicle (not trading) 2) Get your approval from a third party and 3) the actual purchase of the vehicle. Get the price of the vehicle as a total price out the door rather than a monthly payment. Since you are in a CH 13 you have an extra step: getting the Trustee's approval.

If you trade your vehicle you will get virtually nothing for it. IF you use the dealer for financing you will pay a very high interest rate. If you can't get financing from a CU, you may need to use the dealer financing, but that should be a last resort.

HHM has good info in the car buying section of this site (in the sticky's).

[Lissy]

Well, I don't know how far into your plan you are or how bad your credit got before you filed. But plan on paying a very high interest rate, as a general rule. I got into a car accident 3 weeks after I filed my CH 13 and my car was totaled. So I needed a new one. I got extremely lucky that I even qualified for a car loan because my credit was so trashed. But I did get approved through Roadloans at 18% interest. I tried CarMax, but was not approved. Good luck!

[muzzey58]

My husband and I just went through this around a year ago. Our old car was breaking down and not simple repairs but big ones. The security system was failing and causing car not to start, front struts were going and making car unsafe to drive. Total for repairs would have been in excess of $3000. We went to a local dealer that helps people in an open chapter 13 case. Our lender is Friendly Finance, Baltimore, MD. (800) 872-2877. They specialize in securing financing through reputable dealers. If you contact them, I'm sure that they will help you locate a local dealer. You don't want to deal with a second market dealer!!!!!!!!!!!!! I went through that in the 1990's. Each car that I bought from them BROKE DOWN within 6 months then I was stuck with a repo and a hefty bill. Then no one will be willing to give you a loan. It is better to seek out a reputable dealer who will back their product. Many cars are now available almost new around $11,000 or so. Also, we got a 4 year warranty with our new car. Just remember to have a good down payment. Work with your attorney. They are your best source of information and help. I am just a chapter 13 debtor. However, I've been there just last year and by God's help got a good car. Best wishes.

[stacey31778]

Thanks everyone!

@Mussy: I'm researching Friendly Finance as I type this. May I ask, what is the interest rate like?

[muzzey58]

The interest rate was around 11% for us. I'm not sure what yours would be depending upon your credit. It might be even lower if your credit is better than mine. Even though I've been in a bankruptcy for nearly 4 years. Your credit score is lower while you are in an active chapter 13. Though our credit score was in the basement. It is close to being in the good range, above 600. That's a lot better than being 350. Which our score was before the bankruptcy. This company is alot better than the one car we bought before our bankruptcy. It was 25%. That's highway robbery. I hope this helps.

[stacey31778]

Great news!

I found a dealership that finances with a bank that works with Chapter 13 bankruptcy! Its an Acura/Nissan dealership in Maryland that has some pretty good pre-owned cars for good prices. I was so worried about being connected with a dealership that sells lemons, I just started calling around and speaking with financing managers.