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Purchasing a car and securing a loan after bankruptcy is entirely possible and not nearly as difficult as it seems.  Most people who file bankruptcy start receiving offers for car loans sometimes before the bankruptcies are even completed.  With debt discharged or consolidated, a decent income and a little research, you can actually be driving a new car in no time. Below are the proper steps to follow to make your purchase and loan process go smoothly.

  • Determine what type of bankruptcy you have filed.  There are two types of personal bankruptcy, Chapter 7 and Chapter 13.  In a Chapter 13 bankruptcy you are responsible and have agreed to pay back a percentage of your debt over a period of time.  Because you are obligated to the court you will need a letter from the court appointed trustee giving you permission to purchase a car.
  • Check you credit score.  There are plenty of free credit check sites you can sign up for and receive a free credit report.
  • Research and compare rates.  Spend a little time and thoroughly research and determine which lenders are offering you the best interest rate.   When filing bankruptcy lenders will usually lend money at much higher interest rates.  Check lenders you have previously worked with or try a credit union.  It is best to select three lenders and determine who will offer you the best rate.
  • Expect to put more money down.  The more money you put down the greater the chances of getting a loan and possibly a better interest rate.  The rates with a bankruptcy can go as high as 20%, considerably higher than the average car loan rates.  By putting more money down you can save several hundreds of dollars over the course of the loan.
  • Be realistic in your choice of cars.  Lenders will most likely not give you a loan for a luxury or expensive cars such as a Mercedes or fully loaded SUV.  Instead opt for a reliable, inexpensive, basic car that serves your purpose.  Eventually you can trade up to something you would have preferred.
  •  Be prompt with your car loan payments.  Make sure you make timely car payments and keep current.  This will actually help you increase and build your credit score quickly.   If you show a solid payment history you might be able to do a car refinance and save even more money.

Of course there is always the option to purchase a used car and pay cash until you are able to build you credit score back up and get a decent rate.  The longer you are out of bankruptcy the better the rate you will receive.

For a free consultation regarding bankruptcy matters contact We Legal, APC, Emilia McAfee, attorney at 951-268-1341 or toll free 1-855-534-6646.  Building strong client relationships and providing dedicated professional service to the community.


Attorney Emilia McAfee is a proud native of Orange, CA., devoted wife of a Retired Naval Chief, and mother of eight children. She is a Respected Bankruptcy Attorney and a seasoned Taxation Law Attorney, Workers Compensation Attorney, Civil Litigation Attorney, Estate Planning Attorney and an Employment Litigation Attorney. She graduated with honors with a Bachelors of Science in Law, Excelled in Law School, and obtained a Masters in Law (LL M) specializing in Taxation from Chapman University. Attorney McAfee is a true consumer attorney and believe that freedom is only as strong as the legal system that protect it and the gate keepers that believe in it.

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