I need to buy a car pretty soon

[MIGirl]

I haven't been discharged yet (Chapter 7), but my car is having issues that would cost more to fix than it is worth (head gasket issues, car is over 10 years old). I know I will need to buy a car shortly after discharge. I have been getting lots of letters about getting a car loan, but I don't want to get scammed. What is the best way to get the best rate possible after a bankruptcy?

Thanks.

[justbroke]

They are not scams inasmuch as they know that you can't file bankruptcy again. There is no way to tell your auto-enhanced credit score until you go to apply. I would expect, without a discharge and close, that your scores are in the tank and that your interest rate will be high and may even require a significant deposit.

You can shop those companies and ask them questions or research them individually. There are so many automobile dealerships out there that any number of them will try to get your business. You'll probably not like the rate. It's usually better to get a new car before filing if your credit is decent and you can get single digit rates.

[bcohen]

They are not scams inasmuch as they know that you can't file bankruptcy again.

I am going to respectfully disagree. Most of the offers for auto financing which you will receive--especially before discharge--really are scams, precisely because they know you can't file again.

As soon as I filed for Chapter 7 bankruptcy, my mailbox began to fill with offers for auto financing from various dealers and lenders. Prior to discharge, the overwhelming majority of these were from sleazy "buy here pay here" type dealers, which are known to sell overpriced old cars with high-interest financing. Of course, I received a few offers from legitimate dealers, but those were few and far between. After discharge, then I started to receive offers from the local Chrysler dealer, Kia dealer, Ford dealer, and Chevy dealer.

Also, the decision as to whether or not you should repair an existing vehicle or buy a different one should not be based on whether or not the repair costs exceed its current Blue Book value. The decision should be based on mileage, overall condition, and probability of future problems. You say your current car is having "head gasket issues". Has this been professionally diagnosed, or is this just someone's guess? While I probably wouldn't pay shop prices to do a head gasket on an old car (typically $1500-$1600 around here), there are other easier, cheaper-to-repair problems which are often mistaken for a failed head gasket. For example, some cars have intake manifold gaskets which fail, causing many of the same symptoms.

[justbroke]

I am going to respectfully disagree. Most of the offers for auto financing which you will receive--especially before discharge--really are scams, precisely because they know you can't file again.

My artful wording of "inasmuch as they know that you can't file bankruptcy again" may not have hit home the way I intended. If they are actually trying to get you into a ridiculous rate with large down payment, that's bad; but it doesn't make it a scam. I could actually be wrong albeit my experience was different and not one of my offers was a "buy here pay here." All of my pre and post-discharge "offers" were from local original manufacturer dealers (Ford, Chevrolet, Kia as I can recall).

I always think of a scam as believing that I'm dealing with a legitimate business and later finding that I'm dealing with a "scam" business which took my money and didn't provide the product that we agreed on or provided an inferior product.

In any event, maybe I should have used stronger language and say that I don't necessarily endorse these. I think one should wait for 6 months, if they can, to earn a better credit score. I went through my credit union at 7.49% after waiting for 6 months. You know, I had to get rid of my scam 722 Redemption loan, from US Bank, that was 19.750% ;) (I say that in jest.)

Okay, here it is again...

They are not necessarily scams. While there will be legitimate offers, all of these businesses send their offers knowing that you can't file bankruptcy again for some period of time. The interest rates, cash deposits, and types of available vehicles may vary between dealers. You will need to sift through the noise. Wait, if you can, for single digit rates. I waited 6 months to refinance a 722 Redemption loan which had a 19.750% rate.

[leonel9]

If you can wait until after discharge, but need to get an auto loan before you have re-established credit via started/secured accounts, I would consider Capital One Auto Finance. As much as I hate Capital One, I do like that their website allows you to get preapproved without a hard inquiry.

If you get declined or are unhappy with their offer, your credit won't be impacted.

As far as offers, I also received offers from franchise dealerships. They were usually misspelled flyers from car salesman who claimed to be "credit experts" and had special "VIP programs" for bankruptcy filers. What a VIP program is for someone who files bankruptcy is beyond me. Perhaps bankruptcy filers are VIPs because they make more money off the auto loans due to the higher rate.

[MIGirl]

I recently had my 341. Would it be better to just buy a car with cash and then wait 12 months in order to get a better car? I will be able to pay $7-$8k for a car. One dealer told me you get better deals before discharge, but of course anything they say I take with a grain of salt.

[MIGirl]

My credit score was about 530 before I filed, now it is 558.

[MIGirl]

If you can wait until after discharge, but need to get an auto loan before you have re-established credit via started/secured accounts, I would consider Capital One Auto Finance. As much as I hate Capital One, I do like that their website allows you to get preapproved without a hard inquiry.

Thanks for that info. I tried them just now, wasn't able to get preapproved.

[bankruptbull]

I am currently in Chapter 13 and just had to get a car while still under the 13 umbrella. Here's what I did, I went to the dealership, told them my situation (and gave them my approval from the judge - you won't have to do that), and they proceeded to try to get me financed through about ten different banks/finance companies. Someone finally approved me and I was able to get the loan and car. The rate wasn't as bad as I thought it would be. If you want to message me, I'll tell you who financed me, my credit score, and rate.