Bankruptcy is a tough time for anybody to go through. It can be financially difficult and emotionally draining, and, if your car breaks down in the middle of the process, it can feel like you’re just facing yet another setback. But don’t assume that getting a car loan will be impossible if you’re going through bankruptcy.
Bankruptcy And Car Loans
It may seem counterintuitive, especially if you’re in the process of liquidating your finances or restructuring your debt in order to pay it off as part of a bankruptcy proceeding. But yes, car loans during bankruptcy are not only possible, they’re even more common than you might at first realize.
That said, they’re not necessarily a done deal and you’ll have to be careful every step of the way when applying for a car loan. First of all, sit down with your bankruptcy lawyer or the trustee working on your case and lay out your situation. They’ll likely be sympathetic to your cause if you can demonstrate that it will cost more than you can afford to get your current vehicle back on the road, and that you need a car to be able to go to work and pay back your debts. Discuss with them what needs to happen on your end to take on this debt and buy a new car, and what they want to see from you in order to insure it can happen.
From there, you’ll need to seek out your lender. This should always be done, but here it’s particularly important.
Finding The Car You Can Afford
Start by casting a wide net for lenders. Services like Federal Auto Loan can help you apply to a large number of lenders by filling out one application. While not every single lender will get back to you, enough will contact you that you’ll be able to compare quotes and begin figuring out what’s available to you based on those loans.
With bankruptcy, it’s less about the car you want to buy and more about the car the lenders you can work with are willing to let you buy. While bankruptcy is not the hurdle to buying a car that you may have believed, there will still be a limit to what you can buy. Expect lenders to prefer that you buy a more modest new car than a used car, as a new car is less likely to run into severe maintenance problems you won’t be able to afford. Similarly, expect them to vary widely over how much they’re willing to issue you in principal, and discuss any loan you’re considering closely with your trustee.
Needless to say, you should focus on lower-cost, fuel-efficient vehicles that will last you quite a while, and consider any options very carefully before buying. A tracking device that lowers your car insurance payments may be worth borrowing extra for; leather trim decidedly won’t be.
Despite that, though, you should be able to secure a new car, even if you’re deal with bankruptcy. If you need a car to get to work and pay your debts, don’t worry; that’s one debt you’ll always be allowed to take on.