Tips on buying a car after Chapter 7 discharge are, quite surprisingly, the most sought after information. Unlike Chapter 13, Chapter 7 is regarded as a straight type of bankruptcy filing which allows debtors to be discharged from their financial obligations and freed from either most or all of their existing debts in order to give them a fresh start financially. While Chapter 7 bankruptcy may be one of the best means to get that significant and instant relief debtors could only dream of in the past during their prolonged period of financial hardships, it does not come without a price to pay.
Yes, the fresh financial start means debtors must rebuild their credit and this is as much a blessing as it is a curse. This is largely due to the fact that rebuilding a credit isn’t quite like racing a car; with a car race, you can hit the road as fast as you can and see how far you have come – rebuilding your credit after being discharged of Chapter 7 can take a long time. Many debtors are worried they would never be able to take out a mortgage or a loan for a vehicle, but is it true? One thing for sure is buying a car after your Chapter 7 discharge is possible. See the following tips to know how.
Carefully work on your credit rating
As soon as your Chapter 7 discharge is rolled out, there will be quite a large number of credit offers knocking on your door. During this time, you must carefully assess these offers and then weigh in the pros and cons – not only will this force you to choose more wisely, this will also help you avoid having to end up in a bad place financially. Once you have made a decision, you may start with an unsecured and a secured card to rebuild your credit score. Do not forget to double-check your reports and correct any error in those reports when you find it. A whole year is sufficient to build and optimize your credit score to take out an auto loan.
Deal with the existing car loan
If you had an existing car loan before you filed for Chapter 7 and you decided to keep the vehicle even after you were declared bankruptcy, it is important for all of the payments to be paid off and be paid on time. This bit of information will greatly improve your chances of being approved for a car loan as it demonstrates your commitment, reliability and responsibility.
Save up for down payment and get your paperwork
Saving up for a down payment does not only help lower the interest rate if you are approved for an auto-loan, but also makes improve your chances on getting the auto-loan when you are barely meeting the borrower qualification set up by the lending institution. As for the paperwork, you must never forget to attach your recent pay-stubs, copy of credit reports, as well as your discharge papers when you consider buying a car after Chapter 7 discharge.