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Bankruptcy Auto Loans: When’s the Right Time?
Bankruptcy auto loans may be necessary in situations where you absolutely would not be able to afford a car otherwise due to the downfall of your credit score, but these very bad credit car loans are hardly ideal if they can be avoided. If you’re looking into getting a car loan with a bankruptcy on your credit history, you’ll want to make sure the situation is right before taking out a bankruptcy auto loan. If any of the following applies to you, a bankruptcy loan just might be your best bet.
You Don’t Own or Have Transportation
Bankruptcy loans should be taken out only when absolutely needed. In this case, “need” means that you have no other vehicle (since whatever vehicles you had prior to bankruptcy have been repossessed) and you don’t have access to public transportation (or public transportation can’t meet your needs). If both of these are true, then you will need a car, and of course getting a car suggests taking out a loan. If a bankruptcy loan is all you can get, then so be it.
You Actually Went Bankrupt
Bankruptcy loans should not be viewed as potential alternatives to bad credit loans, no credit check loans, or guaranteed auto loans. A bankruptcy loan is just about as bad as it can get, and should be your last choice when searching for loans. Even if you did file for bankruptcy, look for any of the 3 types of loans just mentioned before you go searching for auto loans. If you didn’t go bankrupt, there’s no reason to attempt to get a bankruptcy auto loan.
You Won’t Spend Too Much
Since bankruptcy auto loans have extremely high rates and penalties to compensate for the risk that the loan will never be repaid, the best thing you can do is borrow absolutely as little as possible. If you have any money at all stored aside, make a bigger down payment on the vehicle and finance less. Also, be sure you’re making good choices as to the vehicle you’re purchasing. If you have a bankruptcy on your record, your main concern should be functional transportation—not style or even convenience. If you can get a used car with tears in the seats without an air conditioner at a very discounted price, it may be worth it as long as it runs reliably.
It may be possible to find cars at discounted prices when you buy them directly from the seller. Search CraigsList and other classifieds to find cars for sale by owner, and be sure to get a history check first.
Bankruptcy auto loans are rarely desirable, but under certain circumstances, they may be your only option. Look for guaranteed, no credit check and bad credit loans before resorting to bankruptcy loans as a last choice. Should you be forced to get a bankruptcy auto loan, the important thing to remember is to finance as little as possible and pay it back as quickly as you can.
