I recently had the opportunity to speak with a customer who just completed a Chapter 7 bankruptcy. My client agreed to help with my research regarding automobile financing since he himself was in the process of shopping for an auto loan. The value here is that he is just out of bankruptcy, which allows me to present to you an actual scenario rather than a hypothetical situation. It is also relevant in light of all the new financing guidelines that are prevalent due to the current recession and its effect on financing. Over the next two issues my goal is to help you understand what you need to know and do to finance a car right after bankruptcy.
Following is an outline of what we will cover over the next two issues:
- Financing: Who is actually doing the loan?
- What is the finance company looking for?
- How to be prepared before visiting the dealership.
- What local dealerships in the DFW area will help you.
The very first step once your bankruptcy has been discharged, is to obtain a credit report from all three major credit bureaus. I will provide information in our next issue how to get your credit report and what to do with it. Your credit report contains a score which is an indicator to your creditors on just how safe of a credit risk you are. Fortunately, bankruptcy doesn’t necessarily mean you are a bad credit risk. Frank Uhl of Bonham Chrysler says it could actually help you because the finance company knows you cannot declare bankruptcy but once every eight years if you discharged your debts under a Chapter 7 plan. It is also likely that your debt ratio has been significantly reduced, which makes it easier for you to pay.
The key factor in regards to your credit report will be your credit history prior to bankruptcy. This can be a good thing or a bad thing for you. Regardless, it is recommended that you see your report, know how to read it and understand what the finance company is looking for. We will show you that in our next issue towards financing a vehicle fresh out of bankruptcy.