topic Re: Car loan after Chapter 7 discharge in Bankruptcy

Car loan after Chapter 7 discharge

Currypuff72 — Mon, 20 Sep 2021 03:00:30 GMT

Our 341 mtg was on 8/26/2021. We converted from Chapter 13 to a 7. Our current car is IIB after paying through the chapter 13 trustee. Waiting for NMAC to contact us as far as taking the car back. My concern is that we will need another vehicle and I'm just wondering what our chances are after the chapter 7 is discharged as far as being approved for an auto loan. Credit Karma shows vantage score TU at 704. Today I did a SP with Apple Card/Goldamn Sachs because I heard that if they deny you they provide your credit score with the denial and sure enough they did deny me showed my TU at 600. My question, if anyone can answer, is Now that I have a little more of an idea of what my Fico credit score is, what are our chances of being approved for an auto loan once our chapter 7 discharges? We currently show 2 past auto loans with Tidewater and Cap1, both paid in full, never late, on all 3 CRA. NMAC shows closed, IIB.

Re: Car loan after Chapter 7 discharge

MileHigh96 — Mon, 20 Sep 2021 10:23:12 GMT

Do you not wnat to keep the current vehicle you have? Because as long as you keep making payments, they can't repossess the car. And if you actually want to keep it, before the discharge goes through, you could even reaffirm the loan and it will begin reporting on your credit report again.

But if you don't want to keep that vehicle and loan and want another vehicle, a car loan will probably be the easiest thing you will be able to get right after discharge. I have had at least 4 dozen letters from car dealers since my BK7 was dfischarged a few months ago. Almost any dealer will work with you and be able to get you financed, even fresh of a BK7 discharge. Of course you won't get favorable interest rates or anything like that, but you should be able to get an auto loan fairly easily, depending on your income of course.

Re: Car loan after Chapter 7 discharge

Currypuff72 — Mon, 20 Sep 2021 13:32:46 GMT

I didn't want to, but ended up including the car in the chapter 7 due to high miles and since we had to get our chapter 13 dismissed before converting, it caused our payments to nmac to be late and they wouldn't work with us. I've read about everyone receiving communications from auto dealers but wasn't sure if that is once you file the chapter 7, after the 341 meeting, or after the case is discharged. Thanks for the response. I guess at this point it's all about patiently waiting for that discharge to be made.

Re: Car loan after Chapter 7 discharge

Anonymous — Tue, 21 Sep 2021 11:29:16 GMT

I filed BK7 in March of 2021 and it was discharged June of 2021. (I had 2 vehicles IIB and my scores were in the upper 500s after discharge.) I had at least 10 letters from dealerships offering to work with me to get me into a brand new car and how they specialized in bankruptcies. Here are some things I learned:

- Your interest rate is going to be high (mine was around 16%)

- You can refinance after 6 months and do way better (NavyFed got me into 3%)

- Some banks will consider cars 1-2 years old with less than 7500 miles to be "new", so check out CPO car deals

- Do not let a dealership "turn in your car for you" if it's IIB

Again, this is from my personal experience with CH7 BK. I hope this helps! Keep your head up!

Re: Car loan after Chapter 7 discharge

Currypuff72 — Tue, 21 Sep 2021 14:42:20 GMT

Thanks for the advice, I appreciate it. Were you able to get a CPO car and do you mind if I ask how much you were approved for? Thinking about going to an auto loan broker instead of a dealership. I have a car in mind but don't want to be too wishful in what I want. Did you pick out a car you wanted or were you pretty much given "options" as to what kind of car choices you had?

Re: Car loan after Chapter 7 discharge

Horseshoez — Tue, 21 Sep 2021 14:50:44 GMT

@Currypuff72 wrote:
Thanks for the advice, I appreciate it. Were you able to get a CPO car and do you mind if I ask how much you were approved for? Thinking about going to an auto loan broker instead of a dealership. I have a car in mind but don't want to be too wishful in what I want. Did you pick out a car you wanted or were you pretty much given "options" as to what kind of car choices you had?

While my response here will not answer your question, at least not directly, it may offer some guidance.

Having purchased over 30 new cars in my life and having read many of the posts here from both folks who've purchased new cars after discharge and from individuals who've worked the other side of the desk in dealership finance departments; I can say with a fair degree of certainty, what you will be approved for "depends". Depends upon what you might ask. It will depend upon your income, your current debt load (probaby pretty low if your just post-discharge), how much interest you are willing to pay, and possibly more important than anything else, the size of your down payment. I've heard some current and former finance managers say, "With a large enough down payment, I can get you approved for pretty much any car." The rub of course is, how large does that down payment need to be? Ten percent? Twenty percent? Higher?

In the end I believe you'll need to bite the bullet and go car shopping to figure out what you'll be able to afford.

Re: Car loan after Chapter 7 discharge

Anonymous — Tue, 21 Sep 2021 14:50:57 GMT

I didn't dream too big at first because I didn't know what to expect. I was approved for a brand new vehicle up to 27k at 16%, then I refinanced to 3% about 6 months later with NavyFed after being super careful not to do much else. Fast forward to June of this year and the car market is super hot, so I was able to trade out of my respectable car choice for more than I owed and get into a car with more bells and whistles at 40k for 3% and my payments are still more affordable than that 27k at 16% were.

Re: Car loan after Chapter 7 discharge

Currypuff72 — Tue, 21 Sep 2021 17:30:14 GMT

Thanks for the insight. I've financed several cars over the years but this is a whole new ballgame as far as figuring out how it'll work after a BK7, and immediately after it's discharged, at that. We have the income and we don't have any monthly payments except for the normal house and utility payments. I definitely will not have a high amount of down payment immediately available and have an idea of how much I'd like to keep the monthly payment at. My credit union has stated I'd have to wait at least a year after discharge to try and get approved for a car loan through them so I definitely don't want to waste my time trying with them.

Re: Car loan after Chapter 7 discharge

Currypuff72 — Tue, 21 Sep 2021 17:38:13 GMT

I expect a high interest rate and hope to refi with my credit union at some point in time. Did you also rebuild with any cards? I am so over credit cards but at the same time we literally have nothing on our credit reports and I realize we will have to rebuild with a card or two in order to start getting our scores back up to speed. Any insight on what cards you went with after your discharge would be highly appreciated.

Re: Car loan after Chapter 7 discharge

Horseshoez — Tue, 21 Sep 2021 18:32:29 GMT

@Currypuff72 wrote:
I expect a high interest rate and hope to refi with my credit union at some point in time. Did you also rebuild with any cards? I am so over credit cards but at the same time we literally have nothing on our credit reports and I realize we will have to rebuild with a card or two in order to start getting our scores back up to speed. Any insight on what cards you went with after your discharge would be highly appreciated.

As you will read in lots of places here, you need 3 credit cards and some sort of an installment loan (mortgage, car loan...) for optimal credit scoring. The usual suspects of the best cards to get post-discharge include (but are not limited to) the following:

CapitalOne Quicksilver
Navy Federal Credit Union nRewards secured credit card
Discover secured credit card
TDBank TDCash secured credit card (if you live in the northeast)
FNBO secured credit card

Regarding secured cards, if you can swing it, I strongly recommend a high security deposit, if for no other reason than when your card graduates to unsecured, you will typically get the same or higher credit limit.

Re: Car loan after Chapter 7 discharge

Currypuff72 — Tue, 21 Sep 2021 18:56:58 GMT

Thanks so much! I'll now go and search for some posts on here regarding cards after BK7 discharge.

Re: Car loan after Chapter 7 discharge

MileHigh96 — Tue, 21 Sep 2021 19:24:13 GMT

@Currypuff72 wrote:
Thanks so much! I'll now go and search for some posts on here regarding cards after BK7 discharge.

If you sign up and go through Credit Karma, you can get some offers for haslfway decent cards coming out of bankruptcy. I got my Mission Lane, Ollo, and Mercury card all from invites through Credit Karma.

Re: Car loan after Chapter 7 discharge

Currypuff72 — Tue, 21 Sep 2021 19:37:59 GMT

Do you know if the invites for these cards typically show up on CK after the BK7 actually discharges?

Re: Car loan after Chapter 7 discharge

Horseshoez — Tue, 21 Sep 2021 19:44:12 GMT

@Currypuff72 wrote:
Do you know if the invites for these cards typically show up on CK after the BK7 actually discharges?

They often do, but take their appearance with a serious grain of salt; CreditKarma makes their money by advertising credit products, so just because they say you're qualified, that in no way means you are actually qualified.

Re: Car loan after Chapter 7 discharge

Currypuff72 — Tue, 21 Sep 2021 20:05:18 GMT

That's what I figured. Think I'll start off using the Cap1 preapproval tool once our case discharges and go from there.

Re: Car loan after Chapter 7 discharge

MileHigh96 — Wed, 22 Sep 2021 10:23:41 GMT

@Currypuff72 wrote:
Do you know if the invites for these cards typically show up on CK after the BK7 actually discharges?

While CK does get paid for offering things, they have to make their money somewhere since they are a free service to consumers, they do give offers that you cannot get without going through them. The offers should start to show up after discharge. Ollo and Mission Lane are both invitation only cards right now and I was able to get them within a couple of weeks after discharge. CK will also tell you what kind of chance you have of getting approved for the card, from outstanding to poor.

CK will still offer the predatory type cards and I avoided those and went with the once that were more decent. While all three (Ollo, Mission Lane, and Mercury) may be of the sub prime variety, I don't feel they are predatory. Only the Mission Lane came with an AF and all three are unsecured and gives me a total credit line of $5500 from those three cards. YMMV of course but that is just my 2 cents. I couldn't go the CapOne route since I burned them in my BK7 and I wanted to try and avoid secured cards or the horribly predatory cards and went with what I thought was my best offers.