kennedy111481

My friend wants a car after filing chapter 7

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My friend just filed Chapter 7 and she wants me ask...how soon can she buy a car...since most car dealerships now work with people with bad credit no credit and bankruptcy. She is scared to call the car dealership and is ashamed of her situation. Do you guys think she can buy a car now she just a week ago finalized everything with the courts....

Please help her she is hopeless (so am I)

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Many people can get a car literally the day after their discharge. If they are willing to "pay the piper."

Programs I've seen usually call for a fairly large downpayment and have very high interest rates. Don't be suprised in having to put 10% to 20% down and have a rate over 15%.

It is generally better to wait a couple years after the BK before going for such a large credit debt. This is because, even though the debt is secured by the car, cars depreciate so rapidly. Even for someone with good credit the first year or two of a car loan is technically "unsecured debt" because the car is worth less than what you owe.

Work on smaller credit debts first like a couple low limit credit cards and you'll be rewarded with a better score and lower rate on your car purchase.

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Yep its discharged..

I tend to agree with Methuss. I know you're just trying to get some advice for your friend (and that's nice of you by the way) but has this persons financial management changed? What is their income like? What is their current debt situation? I wouldn't recommend they get an expensive car at the very least.

The one thing I want to caution against is that when she starts looking for an auto loan (if she can't be persuaded to wait a bit) to be careful about those that accept people "with less than perfect credit, BK's, etc..." because often times they'll sell you a car worth 7,500 for 14,000 instead and on top of that the interest rate is HUGE so their payment is astronomical and it just isn't worth it if she's trying to get back on her feet...in other words, it'll only make things worse. She needs to have a loan where it's something SHE can afford. She needs someone with her that can help her dicker on the price if at all possible.

I wish her the best of luck.

Elyse

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Well, here's what happened with us...

When we filed BK, we were both out of work...no income...lasted about 14 months. Kept one car through the first 13, then, April 15th, it got repoed. Started a new job May 3rd, got a newer car May 23rd.

We went to our local Chrysler dealer and got a used "rental" car that they had purchased from Avis. It was a year old, with about 24,000 miles on it, but we got it just at the blue book price. Financed it through HSBC at 10%. Not a great rate, but its a car, and its reliable.

Worked for us...

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I run a finance department at a dealership so i might be able to help with this one...You said she just filed...Is it a dismissed or a discharged BK??? If dismissed i suggest she waits till it is discharged and she can purchase the same day it is discharged...She can purchase just about anything she wants, Rule of thumb is 20% of her gross income for a payment, and at least $1k down will get her in a nice automobile....She can purchase a new car if she wants. Alot of dealerships pay big money for a list of currently discharged BK's for prospecting....Now if it is a DISMISSED BK i would suggest her to wait till it is discharged....If in DISMISSED it is still possible but real limited to lenders that will loan and she will pay rediculous rates and downpayment...Hope this helps...

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She is also more likely to get an American car vs foreign because sales have tanked with the rise in gas prices!

Even w/o BK, I was able to get a new car 0 down but at 23%!!!!

My brother got a new Scion while still in his BK13.

It can be done.

BTW, ART ROD....they cannot "wait" for a dismissed BK to be discharged. Dismissed is just that - end of case.

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She is also more likely to get an American car vs foreign because sales have tanked with the rise in gas prices!

Even w/o BK, I was able to get a new car 0 down but at 23%!!!!

That's not a good thing.

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does your friend have any money already socked away? she may be able to get a car to get her around until she gets back on her feet. craigslist is a great place to look. or local newspapers.

just make sure she gets the car checked out by a mechanic with a lift before she buys.

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Even before my BK7 finalized, my mailbox was flooded with offers for pre-approved financing for a cars. There are tons of creditors who troll public records looking for BKers to extend 20+% financing to. Filers are usually out of options and cannot discharge debts so the sharks start to circle. There is plenty of credit out there- most car lots will finance one day out of BK. Their finance manager will shop it out to lenders. Even if a lender doesn't want the deal, they are compelled to take it to make the dealership happy or the finance manager will stop sending the prime deals their way.

At the risk of being redundant, the previous posters have it right. Its totally not suggested- BK is a fresh start, why dig a huge ditch and make a lender rich with 20+% interest? Probably not what one wants to hear, but so important for BK'er to comprehend.

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