If you've recently filed for bankruptcy, chances are you're already wondering about life after bankruptcy. There's a lot of uncertainties associated with bankruptcy and even more so with what happens afterward. It's important to understand that there is a life after bankruptcy. Over time, you'll begin to adjust to your new way of doing things, and you'll realize that bankruptcy is the fresh start you needed to move forward.
After bankruptcy, you may find there are things that you need that you didn't need before filing, such as a new car. Maybe the one you have now is no longer reliable or you've found that it's just more than you need. Many people who file for bankruptcy are afraid that they won't be able to get a car after filing for bankruptcy. However, this isn't the case. Read on to learn more about buying a car after filing for bankruptcy.
Cash vs. Credit – Which Is Better?
When it comes to purchasing a car, you have two options: pay for it in cash or finance it. There's no right or wrong way to purchase a car after bankruptcy, and the better option for you depends on your own circumstances and resources available to you.
After filing bankruptcy and discharging some debt, you may find that you have extra disposable income. Or, maybe a family member is able and willing to loan you some money. If this is the case, you may be better off paying for your car in cash. That way, your monthly payments will be low or nonexistent, making it easier to afford over time.
If you don't have enough cash to buy a car outright, you may still be able to get a loan despite having filed for bankruptcy. After filing for bankruptcy, lenders will be eager to give you new credit and car dealerships may even mail you sales letters inviting you to buy a new car. However, you need to be careful before accepting any of these offers, and there are pros and cons to taking out a new loan shortly after bankruptcy.
Getting a new loan can help you re-establish your credit – as long as you're able to make the monthly payments on time. Financing may be the best option for you if you need a new car but don't have the cash to pay for it right away. However, it's important to be careful when taking out a new loan, especially if you just filed for bankruptcy. Many lenders will charge you extremely high-interest rates if they see that you've filed for bankruptcy, and it's important to read over the terms before accepting a loan.
Be Realistic About Your Car Choice
After filing for bankruptcy, it's unlikely that a bank will approve a loan for an $80,000 vehicle. You're more likely to get approved for a $15-20,000 loan instead. Although you may not be able to get that new luxury SUV you were hoping for, you'll still be able to get a reliable vehicle. After a few years, you'll be able to trade in the less expensive car for something closer to what you're hoping for. For now, understand that you may have to settle for a smaller, more compact car.
What About Buying a Car Before Bankruptcy?
Although we can't recommend that you incur new debt before filing for bankruptcy, there are instances where it's better to buy a car before filing for bankruptcy instead of after. Maybe you have a good credit score and find that you're able to get a great interest rate now. In that case, it would be better to buy a new car before bankruptcy rather than waiting until after when your credit score takes a hit. Whether you should buy a car before or after bankruptcy depends on many different factors including your current financial situation, your current credit score, the state of your vehicle, and more.
Although you may not believe it right now, there is a life after bankruptcy. If you're afraid to file for bankruptcy because you're worried you won't be able to get a new car, it's important to understand that there's nothing stopping you from buying a car after bankruptcy. Just make sure that you're realistic about your expectations and that you can afford the monthly payments on your new vehicle.
If you're thinking about filing for bankruptcy, the best thing you can do is to meet with an experienced bankruptcy attorney. They'll be able to look at your case and advise you throughout the bankruptcy process.