What should you consider while buying a car after filing bankruptcy?
With unlimited options of car loans, it has become quite easier to get approved for loans even after filing bankruptcy. The terms are also flexible to make the offers affordable. Secured car loans are offered to the applicants with bad credit history as there is guarantee for the loan. However, it is suggested that the features and terms of the loan should be understood clearly before you accept an offer. The tips here might help you get a car loan after filing bankruptcy.
Analyze the need to purchase a vehicle: First and foremost factor is to understand whether you really need to buy a car in your situation. If your car is in good shape, it is better you postpone the idea of purchasing a new vehicle.
Buy an inexpensive car to improve the credit score: If you are in utter need of a vehicle, you can go for used vehicle which is in good working condition. Used car costs you less than a new one. If possible, you can pay cash to make the purchase. Instead of applying for loan, you can use your savings to pay for the vehicle. If you do not have enough savings for the purchase, you can start securing sufficient funds every month for the purchase if the need is not urgent. This will prevent you from spending for other unwanted items as you need to save for the purchase of the vehicle. The main advantage is that you have no need to pay interest to anyone.
Improve your credit through prompt repayments: If you are prompt in loan repayments, you can improve your credit score significantly. When you are buying a vehicle with the support of loan, it is advised that you buy a cheap and best one to make your repayments affordable. With poor credit history, the interest rates are very high. The yahoo finance lenders would want to minimize the risk involved in offering loan to poor credit borrowers. To get into shape, it is inevitable to purchase an inexpensive car and make prompt repayments to improve the credit score and become eligible for traditional loans for reasonable interest rates.
Negotiation helps to reduce the price of the vehicle: While you decide to buy a used vehicle, you can negotiate to reduce the price. The value of the vehicle should be understood so that you can bargain for a lower price while allowing the dealer to make some profit out of the deal.
The terms of the loan should be clearly understood. See to it that the offer does not specify penalties for early settlement of the loan, so that you can save on the interest amount if you get sufficient resources to clear the loan at the earliest.
Consider refinancing the vehicle after a year of purchase: Making repayments on time improves your credit score thereby making it possible to get refinancing loan for lower interest rates. You can make additional payments towards the loan and clear it fast so that the amount paid towards interest is further saved.
Search for other options: If you are not able to get loans with poor credit history, you are left with the option of secured loans which do not consider your credit history. While you go for secured loans, you can get lower interest rates on the offer as there is no risk for the lenders. However, the risk involved should be understood. For the purchase of a vehicle, you should not lose the property which has a higher value. Your family members with good credit can be approached to cosign the loan for lower interest rates.