Car buying... in Ch13

[jibb3r]

I just found this forum about 10 minutes ago. I searched briefly, but didn't find an answer to my situation. If this has already been discussed, please direct me to the light.

I filed bankruptcy in 11/08. I paid one lump sum on 3/13/09 (from an annuity). The trustee said he will send out the payments on 4/1, and I should be discharged by 6/1 at the very latest, to be safe. So in theory my bankruptcy will be ~6mo long. I am stoked.

HOWEVER, my car lease (my only vehicle) expired on 3/17, I am currently borrowing a car until I get an approval from the trustee. I have a few questions about this. I know some will say not to buy a car, but it's a must, I have no other option and no money saved up.

I was lucky (or unlucky?) enough to find a dealer to finance me. The other dealers wouldn't even speak to me with a bankruptcy in progress. However, the dealer showed me 2 cars, and said these are the only two the finance company (CAC) would let them sell me. At first I think this dude's stickin it to me, or is he?

1 - Has anyone dealt with CAC (Consumer Acceptance Corporation)? Assuming they are nationwide. Do they really only allow the dealer to sell me a certain car? Or are these the cars the dealer can't sell, and wants to push off to me? I could understand the finance company saying you can only sell a car under this amount, but the dealer wouldn't even show me another car in the same price range. And the cars he showed me just happened to be very base model cars, that no one would want anyway.

2 - The dealer claims the bankruptcy requires a bumper to bumper warranty, and GAP protection, which tacks an extra $2,000 to the bottom line. Does anyone know if this is true? He claims it's required because in bk, because I don't have money to make car repairs.

Am I being too picky? Should I take the one car he showed me, and move on and think positive that I actually have a vehicle to drive? I really don't have another dealer option, but it would be nice to have other car options, even one with anti-lock brakes would be nice.

Sorry for the long winded post, once I start I can't seem to stop. I have all these thoughts in my head because I can't get a second opinion from another dealer. When I tried, they said go home.

[Flamingo]

"2 - The dealer claims the bankruptcy requires a bumper to bumper warranty, and GAP protection, which tacks an extra $2,000 to the bottom line. Does anyone know if this is true? He claims it's required because in bk, because I don't have money to make car repairs."

This guy will tell you he has a bridge for sale also in New York at a cheap price. Get the approval that you need from the Trustee first and be armed with that before you attempt to finance anything; it would be better yet if you could wait until you are discharged. You must know though that just the BK itself can work against you and you will probably have to face higher than normal interest rates; but be careful as to what those salesfolks tell you; remember, they are out to make money and will tell you anything to sell you a car and get you to take that warranty or that $500 extra paint coating that costs them maybe $35. Best of luck to you!

[jibb3r]

This guy will tell you he has a bridge for sale also in New York at a cheap price. Get the approval that you need from the Trustee first and be armed with that before you attempt to finance anything; it would be better yet if you could wait until you are discharged. You must know though that just the BK itself can work against you and you will probably have to face higher than normal interest rates; but be careful as to what those salesfolks tell you; remember, they are out to make money and will tell you anything to sell you a car and get you to take that warranty or that $500 extra paint coating that costs them maybe $35. Best of luck to you!

I figured he was trying to make that sale, probably so with the basic car he wants to push off on me as well.

I considered waiting until I was discharged. Will it really help that much, to make it worth it? I know my credit is trashed, my score is barely over 500 and the dealer quoted me at a 25% rate. Will it be that much different in 2 months when it's discharged?

I was told to get the numbers from the dealer first, and then submit them to the trustee for approval. It makes sense to do it the other way around, to have some fighting ground with the dealer. That's on my to-do list!

Thanks for the reply.

[Flamingo]

I figured he was trying to make that sale, probably so with the basic car he wants to push off on me as well.

I considered waiting until I was discharged. Will it really help that much, to make it worth it? I know my credit is trashed, my score is barely over 500 and the dealer quoted me at a 25% rate. Will it be that much different in 2 months when it's discharged?

I was told to get the numbers from the dealer first, and then submit them to the trustee for approval. It makes sense to do it the other way around, to have some fighting ground with the dealer. That's on my to-do list!

Thanks for the reply.

In this economy it is hard to tell if you would fair better after discharge as to a lower percentage rate. Dealerships in the past were more open to financing after discharge than during a Chapter 13 but whenever there is a BK on your records, you can usually expect higher than normal percentage rates. You just may have to do the best you can under these circumstances if you have to purchase a car at this time and have no other choice. 25% is obscene. Have you looked into a good used car instead of buying new?

If I were you I would get approval from the trustee first as to what you can afford since you are not able to wait until after you are discharged.

[HHM]

I can certainly see the lender requiring GAP insurance. Think of GAP insurance like PMI, Private Mortgage Insurance. With a recent BK, many lenders will probably require GAP insurance. However, requiring a bumper to bumper warranty, not sure on that one. (for a lease, yes, for a purchase, not sure). Ultimately, you can call their bluff and walk from the deal.

[jibb3r]

In this economy it is hard to tell if you would fair better after discharge as to a lower percentage rate. Dealerships in the past were more open to financing after discharge than during a Chapter 13 but whenever there is a BK on your records, you can usually expect higher than normal percentage rates. You just may have to do the best you can under these circumstances if you have to purchase a car at this time and have no other choice. 25% is obscene. Have you looked into a good used car instead of buying new?

If I were you I would get approval from the trustee first as to what you can afford since you are not able to wait until after you are discharged.

I wish it was a new car! That's for an 06 Aveo, with 56k miles. $7,999 advertised price, $10,800 after all the "required" markups... $335 a month...

Does the trustee have any pull on the numbers?? I'm not exactly sure what his approval includes?

I am definitely going to get the trustee's approval, then go fight the dealer, instead of the other way around.

[HHM]

The trustee has NO pull on the numbers. The trustees involvement is merely to make sure that the new payment won't materially effect your chapter 13 plan or your unsecured creditors, basically (1) that you can afford it, (2) that it won't effect that chapter 13 plan too badly.

[StartingOver08]

The car salesman is not your friend...he is looking to bump up his commission on this deal to the statisphere! Run from this guy!

The car warranty is a huge profit center for the dealership. Take a look at the car buying info right in this website, look under the stickies and it gives you tips on buying.

Yes, if you are getting a discharge, your credit score goes up after the discharge. I think waiting until your discharge will make a big difference to you both in the selection and the interest rate.

[jibb3r]

The trustee has NO pull on the numbers. The trustees involvement is merely to make sure that the new payment won't materially effect your chapter 13 plan or your unsecured creditors, basically (1) that you can afford it, (2) that it won't effect that chapter 13 plan too badly.

Ah yes, that makes sense. Both the trustee and lawyer agreed that even having his approval was pointless in my case, but it's the law.

The car salesman is not your friend...he is looking to bump up his commission on this deal to the statisphere! Run from this guy!

The car warranty is a huge profit center for the dealership. Take a look at the car buying info right in this website, look under the stickies and it gives you tips on buying.

Yes, if you are getting a discharge, your credit score goes up after the discharge. I think waiting until your discharge will make a big difference to you both in the selection and the interest rate.

That's the funny part. I've known this dude since I was a kid, always thought he was giving me a deal, even though everyone said I was getting shafted. Guess I have "SUCKER" on my head. But, I've always had cash in hand when I went to him, and didn't care about throwing it out the window, for a new ride. Now that I am in need of his "deal", he suddenly has no pull in anything, being the Sales Manager and all. So I am going to go down there and call his bluff on it. Chances are I will go elsewhere... if it's at all possible.

I wasn't aware there is car buying information on this site. I will certainly look into it, and see where to go from here.

I called CAC myself, after the first few replies on this post, to get a final answer. What do you know, they DON'T require any warranties or GAP insurance, they also said I am able to pick any car on the lot, within the price range (obviously).

So I got news for this "buddy" of mine...

Thanks for the replies. Always nice to have a good forum around for my off the wall questions!

[woeisme]

Could you look into getting a cheapo car, for a thousand or two, at one of those "buy here, pay here" places instead? Use it and save for a better car while putting the BK behind you for several months? Just a thought.

[spearmint]

Could you look into getting a cheapo car, for a thousand or two, at one of those "buy here, pay here" places instead? Use it and save for a better car while putting the BK behind you for several months? Just a thought.

What's a buy here, pay here place? Does it just mean you pay cash in total?

[IBroke]

What's a buy here, pay here place? Does it just mean you pay cash in total?

When looking for a car in that price-range and you want to pay in cash ($1K-2K), buy here pay here is NOT the place to shop for a car.

Buy here, pay here are usually small companies who sell you a car AND provide you with a loan - without a bank involved. Good if you need a car but are unable to get approved under normal circumstances, BAD due to high APRs (25%) AND high prices. Usually, they charge you a few thousand more than what the car is worth - so when you want to buy a cheap car in cash, STAY AWAY from them!

Buying from a private party would be a recommendation for that price.

[jibb3r]

Could you look into getting a cheapo car, for a thousand or two, at one of those "buy here, pay here" places instead? Use it and save for a better car while putting the BK behind you for several months? Just a thought.

Yeah, they were my first thought. I went to one of them, (they are on every corner around here) they said the payments are around 350 for every car on their lot. IBroke hit it on the head; Interest is 25% across the board, and they want 1-2k down. Not to mention their cars are all ~10 years old with ~150k miles, for 5-10k dollars. I ran.

This whole car buying thing is more trouble than it's worth.

[BigJohn]

jibb3r, I hope you can drive stick shift because what I would get is the cheapest new car available. Look at what the pricing is over the internet. Play one dealer against another.

[woeisme]

I was thinking buy here pay here because they'd be the ones that would finance someone with BK, which OP has to do now since lease is ending. But if you can find a better deal, definitely go with it.