A friend declared Chapter 7 Bankruptcy last fall before the law change, and his debts were cleared and honestly I cant really say if it is a good idea or not for him to apply for a car loan as his first application for credit of any kind post-bankruptcy. I would tell him to look into credit counciling, but every site I have seen has some kind of a catch or is not entirely unbiased. The loan amount he wants is 15K for a late model used car. His income to debt ratio is excellent now, unlike a year ago when he was not recieving his pension.
Any advice for him considering it is roughly six months since his Chapter 7 bankruptcy discharge and if applying for a car loan is fine at this point?
2007-01-23 07:02:24 · 11 answers · asked by Middy S 2 in Business & Finance ➔ Credit
You CAN get credit immadiately after a BK, but the rate usually sucks. You can rebuild your credit and get a better rate, but that takes time. Best thing to do is to start with a couple small credit cards (like a gas card and an overdraft visa) and build from there. Wait on big ticket items because the higher rate will affect you more.
If you HAVE TO get a car now, then bite the bullet and consider a less expensive one for a year or so and then get a better loan.
2007-01-23 07:37:56 · answer #1 · answered by sdmike 5 · 1⤊ 0⤋
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2016-09-26 05:34:53 · answer #2 · answered by ? 3 · 0⤊ 0⤋
That's an excellent question. Filing bankruptcy seriously haunts consumers for a long time.
The advice I would give your friend is wait if at all possible. I know that for major loans, lenders will want to see a bankruptcy discharged for at least two years before lending the consumer a lot of money. Another factor that is important is reestablishing credit. Hopefully your friend has been paying his remaining bills on time or has even tried to get a few lines of credit.
At this point, only six months later, he will have a super high interest rate for sure.
I hope this helps! :-)
2007-01-28 07:36:23 · answer #3 · answered by YSIC 7 · 0⤊ 1⤋
He can apply, but the truth is he will most likely not get a car loan at any type of decent rate. I am guessing a co-signer or guarantor on the loan will be required as it's such a recent bankruptcy. I do loans for a bank and I can tell you we wouldn't touch it without a guarantor or co-signer, and the interest rate would be much higher than for someone with a good credit rating. This is why bankruptcy is a last-ditch solution - it haunts you for a minimum of 7 years on your credit report, and truth be told, years beyond that sometimes. Rebuilding the credit takes much, much longer than damaging it in the first place.
2007-01-28 02:41:07 · answer #4 · answered by ginabgood1 5 · 0⤊ 1⤋
I work for a high-risk finance company specializing in helping people build or rebuild credit. A lot of people hear the myth that if you file bankruptcy you can get a car immediately because debtors know you cant file again for another 7 years. This is not true. If you look like you're not going to pay, you're not getting financed.
Disregarding that.... how has your friend been doing on everything since his BK discharged? If he has positive credit now after the bk he might be able to qualify for a national lender. But most likely he is going to have to go through someone high risk.
If he is in Oklahoma, lol, email me, I can help get him financed through a franchise dealership.
2007-01-23 07:13:05 · answer #5 · answered by Cynthia S 4 · 1⤊ 0⤋
Tell your friend not to get the loan. At least not for a while.
He should save his money for a while until he can buy a car in cash.
Or he should get a couple of secured credit cards.. and make on time payments. I think Ochard mastercard (secured) reports to all 3 major credit bureaus monthly.
Remember the higher your credit score the lower the interest rate.
If your friend still wants to get a car loan..
Make sure his credit score is decent enough for a large downpayment. and instead of a USED car.. he should new car loan instead.
2007-01-24 04:50:09 · answer #6 · answered by Anonymous · 1⤊ 1⤋
If he just got done declaring bankruptcy last year, the last thing he needs to do is go out and spend 15K that he doesn't have on a car.
Not to mention that even if he can actually find someone to finance him, they are going to rape him with finance charges and interest rates - and they will want a huge chunk of change for a downpayment.
He needs to find something cheap and functional, and save up for it.
2007-01-23 07:10:54 · answer #7 · answered by superfunkmasta 4 · 0⤊ 1⤋
it is a good idea to build up your credit again after a bankruptcy but I don't think he would get a loan that size. Ususally lenders who lend that much after a bankruptcy like to see that you have already started to build up your credit again, not for them to be the 1st ones that you apply with.
2007-01-28 15:59:36 · answer #8 · answered by luciousgreeneyedlady 5 · 0⤊ 1⤋
bankruptcy stays on your credit report for 10 YEARS!!!!
2007-01-23 08:55:32 · answer #9 · answered by sunbun 6 · 0⤊ 0⤋
when i was getting my car, i used this site to get quotes on a car loan. i think it's a great site, check it out (it's free too)!
2007-01-23 07:51:15 · answer #10 · answered by Sub b 1 · 1⤊ 0⤋