722 loans??

[ekelly4200]

I have seen them mentioned and today got something in the mail about 722 financing. What exactly is this? jut a subprime lender? Not that I need it. we are holding onto our Jimmy at 9 %.I am sure if I went for an auto loan right now it would be higher. Just curious as to what it is.

[lrprn]

I have seen them mentioned and today got something in the mail about 722 financing. What exactly is this? jut a subprime lender? Not that I need it. we are holding onto our Jimmy at 9 %.I am sure if I went for an auto loan right now it would be higher. Just curious as to what it is.

When filing bankruptcy under the new law and money is still owed on a tangible asset like a car that was purchased less than 910 days before filing, a debtor can choose to do one of three things - reaffirmation, surrender, or redemption. 722 financing has to do with the redemption option. (By the way, the "722" comes from 11 US Code, Section 722 which deals with redemption in bankruptcy).

For a good, "non-lawyerese" explanation of redemption, check out the following websites:

http://www.goarticles.com/cgi-bin/showa.cgi?C=234795

http://www.legalhelpers.com/legal_helpers/brc_articles_722redemption.html

Hope this helps!

[SinkingFast]

It's a form of Redemption allowed for in the BK Code, 506 (a) (2).

Lrprn gave you a couple of good links that describe the process.

Basically, if you owe more than your vehicle is worth, and you cannot Cram Down the amount you owe, you could be a candidate for a 722 Redemption Loan.

[CindyLou]

I would guess that a redemption loan was be at a much higher rate than 9%, BUT depending on how much you can reduce the amount you owe, it may be a better option. For example, if you currently owe $25,000 on your vehicle at 9% but can get the lien holder to accept a lump sum of $13,000 and can get the redemption loan at $16%, it may be better to get the redemption loan. I haven't done the exact calculations, but there would be a break even point somewhere. It would be worth exploring.

[brainless twit]

Many companies also do what is called a 722 replacement. If you are surrendering your car in BK and do not have another car, they will sell you one. However, my husband and I looked into this and the interest rate was 24%. The cars were NOT worth the money they were charging either.

We ended up filling out an app through carloans.com and a few dealers were willing to work with us. We got a decent interest rate (11%) considering, and we have a reliable vehicle, so we're thrilled.

[sp114]

I looked into the 722 loan, but the interest rate was 24%. I got approved for a capital one blank check less than two weeks after discharge. The rate is 10.95 %. You might want to check them out if you really need to get a different vehicle.