Who were approved through post BK and some details...

[HHM]

I am not going to get in too big an argument here, but I stand by what I said, and your response is about what I expected, but the numbers don't lie, and my source for the $22,000 comes from NADA (you did mention the car you bought, so I was able to look it up).

When you bought the Car NEW, the $26K was a fine price, but when you ReFi'ed it, the car was worth only $22K because it is now a USED car, and it's in that difference that you suffered a loss, you refi'd at pretty much the same price as when you bought it new. Remember, in a ReFi, you are Refi'ing what is now a USED car, so when you compare apples to apples, your refi and a hypothetical purchase of a similar car, you over paid to the tune of about $4000. Regardless of what you think, a ReFi is essentially you buying your car all over again...except that the price is fixed at what you owe the prior lender. What doesn't make sense, and this is what you are doing, is comparing a financing of a new car (when you bought it new), with the financing of a used car (upon your refi)...the confusion is the fact that we are talking about the same car, nevertheless, in a refi, the way to understand if you are getting a good deal is to compare it to a hypothetical purchase of the same car (but keeping in mind that it is now a USED car).

Over the course of a year, you only saved $408 by doing your refi, that is not even one month's car-payment.
Also, you say that you can now afford it, but have you considered the opportunity cost of your car payment. Opportunity cost is an economics term that helps evaluate the value of a dollar by comparing what you could be doing with that dollar vs. what you are doing with it. Had you bought a used car or less expensive car, what could you be doing with that additional money, i.e., had you bought a car that only required a $290 per month payment, what could you be doing with that $208 per month of savings. I.e, you could be saving it, child's college fund, tax free IRA contributions, who knows? Again, my point being, always keep an eye on the big picture and that in every major financial transaction, there are more factors to consider besides the immediate terms of the particular deal.

Although you may see it as such, I am not attacking you personally, you just happened to provide a real example in this thread for analysis...vs. me making up a hypothetical example.

All I am trying to do is provide more tools for analyzing a given circumstance. Most people simply look at payment and interest rate, but there is so much more to making a good deal, and I hope I have demonstrated that through this example.

You're right, I don't presume to know your situation, and I did try to put some qualifiers in my comments, and I do know that it's easier for a car dealership to get a credit challenged individual into a new car vs. a used car because of the incentives the dealership has to offer. The bottom line is, my only true criticism is that you re-financed too soon, because your savings is so incremental, about 6% overall, that it just wasn't worth it had you waited a year or two to refi, you could have done soo much better. But I am also trying to give others some additional tools and some additional insight before to avoid certain pitfalls.

[Viper]

HHM, first off your way off base here and frankly I've would have expected better from you. Anyone who buys a new car is upside down on it the second they drive off the lot, thats just what happens when you buy a new car, BK or not.

Refi on a car loan is not always the WORST move one can make as you say. You are not buying the car twice (that just makes no sense at all), you are just improving your financial ground. It is true that a refi may not always be the best, but it is much better to do it sooner then later. As I'm sure your aware, when paying back a loan you pay more interest then capital in the beginning, so doing a refi after 3 months is better then after 9 or 12 months.

You state that I paid $26K for a car that is worth $22K, clearly that is not the case. I challenge you to find a new car with a sticker of $30,495, invoice of $28,033 and leave paying $22K after all taxes and fees. It can't be done.

Weather or not I refied, I'd still owe the same amount of money, but by doing the refi I can pay back that amount at a lower interest rate. I'm not going to argue that both rates (before and after the refi) are very high, but coming out of a BK7 thats what I (and anyone in my shoes) should expect.

If I could have waited another 10 to 12 months to save up $5K as you had suggested I would have, but there was no way that could happen. I have been driving around in a clunker that just couldn't clunk anymore and I NEED a very dependable van. Sure there are pros and cons to buying new v. used but that has nothing to do with a prior BK, those pros and cons are the same. I chose to buy new so I would have the piece of mind of knowing I hadn't just bought someone else's headache. My income has improved since my BK, and I now can afford this new car. I'm not saying that everyone out of BK should run out and bury themselves in debt again, or even saying you should buy new if you can't afford it. I did what was good for me. This fits in my budget and is what is right for me.

This thread was started so folks could see what deals other have gotten, and what they might expect, not to criticize people and their decisions. Your response had a very Lighting'ess quality to it, maybe your having a bad day but always remember, "It's not what you say, it's how you say it."

I know that you have no prior knowledge of my situations, so it is highly presumptuous of you to assume that you know anything about me and to talk so harshly of me. In the future ask first and get all the facts before you rip into someone.



-Viper

[HHM]

As I thought about it some more, here is an even more shocking result of Viper's deal, Viper actually lost money in the Refi....

Here is how:
Under his first loan (when he bought the car), his total interest over the life of the loan would have been $11,900. Under his Refi, his total interest is $9,700. Thus, you saved $2,200 in interest over the life of the loan, or about $30.50 per month.
However, because a new car depreciates rapidly as you drive it off the lot, (and with the NADA data on the Chrysler), when you refinanced the car 3 months later, the car was worth $21,000 (maybe $22,000); but you Refi'd at $26,282, a differnce of $4,281, BUT you only Saved $2,200 in interest.

Thus, even though the Refi saved you in interest, you actually have a NET LOSS on the deal and are paying $2081 more on the deal than if you had not refianced.

Moreover, Viper's monthly payment only decreased by 6%, it hardly seems worth it.

In short, Don't buy new cars out of bankruptcy, and never buy new cars with $0 down. A new car down payment should be at least equal to the first years depreciation, or about 15%-20% of the purchase price. And for god sakes, never refi a car within the first year of ownership, and probably not even in the second year. If Viper would have waited 2 years to refi, Viper's credit would probably be much better, Viper would have paid down some principal, and it would have only cost you less than $1000 in additional interest over the 2 years you waited.

If you do refi, it should be a significant refi, it should cut your existing interest rate in half, and you should not refi until the amount you owe on the car is roughly equal to the amount you could sell it for. (give or take $1,000).

[HHM]

This thread is a little disappointing.

I understand if you need a car...but you are just coming out of BK and buying new cars, or a BMW...ON CREDIT what the hell? I Suppose all I can say is, I hope you really like the cars you bought, because you will never be able to sell them for what you owe until maybe the last year of ownership.

Let's take Viper's example.
Even by a conservative calcuation, you will pay about $9,700 interest over the life of your refi'ed loan. Your payments will total over $36,000. Right now, if you tried to sell that car today, (based on NADA) you would be lucky to get $19,000 Trade in, and $21,000 in a private party sale, so you're already upside down in the car to the tune of about $4,000 to $5,000.

Also, even if you reduce your interest rate through a Refi, refinancing a car loan is one of the WORST financial moves you can make, you are essentially buying the car twice, especially those of you that are refi'ing within a year of the orignal purchase date, you are essentially paying the same price for the car as you did when you purchased it new, even though the car has depreciated about 20% in value. (you should never have made a bad deal in the first place that required a refi). So in Viper case, he/she paid $26,000 for a car worth $22,000 when he/she refi'ed it.

What viper should have done is..., if he/she can afford a near $500 per month payment, instead of buying a brand new car, (and assuming you did not immediatly need a car for some reason), you should have set that $500 per month aside for 10 to 12 months...and use that $5,000 money as a down payment on a $12K to $15K used car and finance the balance.

Plus with new cars, your insurance rates will be highest on the scale, so between interest, insurance, etc, your cost of ownership is through the roof. Stop and think, and put things in perspective.

[razorguns]

you guys sure have gotten some lousy interest rates. You might as well have bought your cars on a credit card.

r

[BassBoy]

How long after your discharge is hard to answer. Some of us got a new/newer vehicle a month afterwards, 2 months, 3 months and etc. It's hard to say. Getting an auto after BK depends on whether or not you've done any credit repairing to make sure all of your accounts that were discharged in the BK are reporting correctly. If they are not, you could have difficulty getting an auto loan, or any loan for that matter, regardless of how long you wait after discharge.

[gacreditguy]

Could you also include how long after the discharge you waited? I should be discharged any day now, last day for objections was 9/25/06. I am trying to decide if I want to keep my vehicle or get a small SUV. I plan on reafirming my car, but I guess I can change my mind within 90 days after I sign the reafirmation.

Just a thought, if you are to be discharged any day now, you are likely too late to file a reaffirmation on your vehicle. As for my old car, I was WAY upside down on my old Saturn and did not reaffirm it. It went "bye bye" in the BK. I just called the lender and told them I had filed and wanted to surrender it. No regrets at all.. I was almost $10k upside down on that neg equity rat hole..

[sp114]

Could you also include how long after the discharge you waited? I should be discharged any day now, last day for objections was 9/25/06. I am trying to decide if I want to keep my vehicle or get a small SUV. I plan on reafirming my car, but I guess I can change my mind within 90 days after I sign the reafirmation.

[tinroofrusted]

Lender:Americredit
Approval Amount:up to $12500
Interest Rate:18%!!!
Term:60 mos

Refied last month...
Lender:Road Loans
Approval Amount:8900
Interest Rate:13.5%
Term:up to 72 mos

[Viper]

2006 Chrysler Town and Country Touring
Sticker (w/ Options): $30,495.00
Invoice (w/Options): $28,033.00

Negotiated Price: $27,995.00
Incentive: -$4,000.00
Fees & Tax: +$2,342.09

Total Price: $26,337.09

New Purchase, No Trade, Dealer arranged financing.

Date: 6/14/2006
Lender: Americredit
Approval Amount: $26,337.09 (Full Purchase Price $0 Down)
Interest Rate: 13.25%
Term: 72 months
Payment: $532.17
-----------------------------------------------------------------
ReFi

Date: 9/19/2006
Lender: Capital One
Approval Amount: $26,281.47
Interest Rate: 10.95%
Term: 72 months
Payment: $498.20


-Viper

[BassBoy]

Date Discharged: 02/16/2006
Lender: AmeriCredit
Date Applied and Approved: 05/27/2006
Approval Amount: $28,000 (max)
Interest Rate: 13.40%
Term: 60 months

[gacreditguy]

Date Discharged: 06/30/2006
Lender: Capital One Auto Finance
Date Applied For: 09/28/2006
Approval Amount: $39,800.00 (max)
Interest Rate: 10.95%
Term: 72M

Car of interest: 2006 BMW 325i (putting down about $5k on this thing)

[gacreditguy]

Starting a new thread so that we all can start a 'database" of sorts for us BK'ers to review and go to when we are looking for the next vehicle.

Please post the following info:

Date Discharged:
Lender:
Date Applied For:
Approval Amount:
Interest Rate:
Term:


Thanks all..