Loan & Credit Cards

Using Car Loans for Bankrupts – A Comprehensive Guide

car loans for bankrupts

Even if you don’t have adequate amount of money to buy a car and you are bankrupt in court then it doesn’t meant that you have to destroy your dreams to buy a new car. It is that situation when a person legally declares that he cannot pay any of his debts which are pending. It is during this time that the person is known as bankrupt, and a sizable amount of his assets are seized by the government due to his inability to repay the loans which he had previously taken. Buying a car with the help of a car loan at this time is a critical and brave decision, but there are a lot of factors which have to be considered while doing so.

The Chapter 7 and Chapter 13 Bankruptcy

There are these two chapters which a person can take to file his bankruptcy. Chapter 7 bankruptcy is a much more relaxed form than chapter 13. Using car loans for bankrupts is easier when they have declared under chapter 7. Under this, they can pay the debts which are pending by liquidating their already existing assets. The whole procedure may take a few months to be complete. Chapter 13 bankruptcy, however takes a few years to neutralise, mostly 5 years. The person in debt has to negotiate with the moneylenders and devise ways in which he can pay them their debts back. You should not expect a luxury car because you can get a maximum amount of 20000$ and you will be charged at the interest rate of 15 and 18%. Bankruptcy under chapter 13 is more complicated than under chapter 7.

To Buy a Car, One Must First Try Clearing the Previous Debts:

There may be certain moneylenders who always lend money to bankrupts, only to get better interests later. Some lenders will check your previous record of timely payment of current car loans and they will identify that whether you missed a installment or not. However, most do not. Thus, using car loans for bankrupts is difficult, as he must try improving his records as soon as possible, and then move on to apply for more car loans. The credit reports can be checked with Consumer Financial Protection Bureau (CBPB).

To Consider the Actual Requirements

Although a person who has surrendered as being bankrupt can have better aims, and even find the moneylenders willing to lend the amount of money he requires, he must give his priorities a second thought. Using car loans for bankrupts is a tough choice, as they must try settling for lesser amounts of loans. The money lenders may even charge greater amount of interests. Thus, the decisions must be made wisely always.

Using Car Loans for Bankrupts to Get More Credits

Using car loans for bankrupts may be beneficial to some extent. The person can easily put to use the car, and with his improving financial condition, can help repay this loan in a better way. This can in turn, help the person being bankrupt to improve his condition and also to earn more points.

Timely Payment of all the Debts

Using car loans for bankrupts will be of no help if they end up delaying the payment of the existing dues as well the ones they have made in the recent times. Repaying the loan amount along with the interests on time not only helps in maintaining stability, but it also helps in keeping up the credits of the bankrupt.

Also Read: Third Party Vs Comprehensive Car Insurance Policy

The Down Payment also Matters

Using car loans for bankrupts might be a good option, but it is not one must rely on only. Even though a bankrupt person’s economic condition might not be sound, he must still try to make as much down payment as possible. This will be beneficial, as he will be spared from the burden of repaying the loans taken from the various money lenders.

About Jack Louis:

This blog is written by Jack Louis who is a well-known and qualified blogger. I adore to write blog on many topics like Automotive, Business, Fashion, Health, Home Improvement, Life Style, Shopping and more. Here you can see my skills which gives you brief ideas car loans for bankrupts.

About Ajeet Sharma

My Name is Ajeet Sharma Financial Blogger & Founder of Financegab.com. We are a personal finance blog dedicated to personal finance & financial planners. The main aim of this blog is to help people to informed financial decisions.
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