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New Member
mschwax
Posts: 2
Registered: ‎08-11-2012
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Taking out a car loan post bankruptcy- which is better option?

I am 6 mos post bankruptcy. My credit score is an abysmal 572. I am working on improving it, and thankfully, maintained a good relationship with my credit union through the bankruptcy. I finished paying off the small vehicle loan I had left, and they are willing to work with me again. I will be getting an insuramce settlement in a few months, approximately $10,000. I need to purchase a new, used car- looking at about the $10,000 range.  Which option will benefit my score the most?

 

Option A) I put $5000.00 down on car, finance remaining $5,000 and make regular payments for the loan term, keeping the remaining $5000.00 as an emergency fubnd.

 

Option B) I put $5000.00 down, finance the remaining $5000 and then make periodic "extra" payments to pay off the remaining balance in half the time?

 

I appreciate any advice, thank you!

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pizzadude
Posts: 9,674
Registered: ‎01-28-2010
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Re: Taking out a car loan post bankruptcy- which is better option?


mschwax wrote:

I am 6 mos post bankruptcy. My credit score is an abysmal 572. I am working on improving it, and thankfully, maintained a good relationship with my credit union through the bankruptcy. I finished paying off the small vehicle loan I had left, and they are willing to work with me again. I will be getting an insuramce settlement in a few months, approximately $10,000. I need to purchase a new, used car- looking at about the $10,000 range.  Which option will benefit my score the most?

 

Option A) I put $5000.00 down on car, finance remaining $5,000 and make regular payments for the loan term, keeping the remaining $5000.00 as an emergency fubnd.

 

Option B) I put $5000.00 down, finance the remaining $5000 and then make periodic "extra" payments to pay off the remaining balance in half the time?

 

I appreciate any advice, thank you!


Do you have any auto loans or installment loans currently showing on your credit reports ?    I don't think that either option will necessarily give you a FICO score boost ~ but it would likely help to have a positive tradeline like this on your reports to help counter the negatives/BKs.

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
New Member
mschwax
Posts: 2
Registered: ‎08-11-2012
0

Re: Taking out a car loan post bankruptcy- which is better option?

Yes, I have several car loans and other small loans, all through the credit union, over the last 10 years. All were current, never a late payment and paid off in full. I had the last loan at the time of filing and while the judge would not allow a reaffirmation agreement, I continued to pay on it and just paid it off last week. The only negative credit items are for medical bills, which was the reason for the bankruptcy.

Moderator
pizzadude
Posts: 9,674
Registered: ‎01-28-2010
0

Re: Taking out a car loan post bankruptcy- which is better option?

 

What interest rate are they going to be offering you ?   Honestly I don't think adding a new installment loan will really do anything much for your FICO score ~ have you considered just paying cash for the car and not having a car payment for a while ?

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX

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