Paying Off Car Loans After Bankruptcy

If you are stuck paying off car loans after a bankruptcy, it's important to make sure you do research and have a clear understanding of your situation before you make any changes to your financing. Each situation demands different responses.

If you were able to keep your car during the bankruptcy proceedings, then you have an important advantage. Many people are able to keep their vehicles and homes, as long as they are current on the payments for those items.

Before you file for bankruptcy, if you are interested in keeping your car, get current on those payments.

Once you have filed for bankruptcy, that car is going to be an important asset for you. You will need to immediately begin making regular payments on the car and keep current with your obligations. This will help a great deal in rebuilding your credit score and give you a current payment history.

If you have recently gone through a bankruptcy and you need to purchase a car, you have a few choices.

The best choice you can make is to save up a few hundred to a thousand dollars, and buy an older car for cash.

While there are many cars that cost $1,000 or less, there are not many of those cars that you really want to buy. Look in respected consumer magazines and find lists of the most reliable used cars and purchase from that list.

If you are not able to wait a few months to gather up the cash, then you may need to buy a car on credit. You want to shop around carefully, because many dealers will try to take advantage of your situation in order to profit from it.

Beware of those who offer you an extremely high interest rate, then tell you that you can refinance to a lower rate in a year. This is a ruse that unscrupulous dealers use to profit from car loans with predatory rates. Most of these dealers realize that you will have a difficult, if not impossible, task ahead of you when you attempt to refinance, and that you will likely be stuck with the high interest rate.

If you own a car after bankruptcy and you decide you want to sell it or trade it in on a new car, you need to do some research before you attempt to complete the deal.

Make sure you know what your car is worth. Using an online site such as Edmunds.com can give you an excellent idea of both what a dealer would pay and what a private individual would pay for your vehicle.

If you own your vehicle outright, it is often better to sell the car on your own, then take the money to the dealer or the bank and get a loan on a newer car using that money as a down payment.

Even with a bankruptcy, you should be able to get a reasonable loan with a down payment and a reasonable credit score (above 600).

Wait a few months if necessary to increase your credit rating.