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Bankruptcy Friendly Auto Loans Guide

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Regular Contributor

Bankruptcy Friendly Auto Loans Guide

I wanted to cover post DC auto loans as Scupra has done with BK friendly CC due to the large amount of people requesting on rather they should or should not reaffirm an exisiting auto loan due to high payments, etc. As well, for those whose current car is on its last legs and that just happens to coincide with an ongoing BK. Please feel free to add or comment as my comments are based on my search for myself as well some close friends when shopping for a car post BK. 

 

Prime Lenders 

 

-GM Financial  Can be post BK friendly depending on credit profile pre BK. Usually is easier with new cars versus used cars due to LTV ratios having to be well below 100%. Good finance manager can push through loan if the deal is right. One year post D/C is usually a solid auto approval with a decent rebuild. 

 

-Toyota Financial Services/Lexus  Are very post BK friendly with some people getting approved fresh out of BK. Previous history with Toyota helps quite a bit with some getting tiers bumped due to previous on time payment history with Toyota Finance. Surprisingly, Lexus finance follows the same underwritting rules as Toyota so they too are very leninent post BK. (UPDATE) Have been hearing Toyota Financial has changed their underwritting rules in regards to BK...might be more tough to get in right after discharge...again YMMV. 

 

-Honda Financial Services /Acura  Seems to not be as BK friendly as Toyota with heavy emphasis on pre BK auto history even with prior history. I have seen/read ppl on the forums get financed a few months post BK with decent APRs depending on how one builds post BK. Like Lexus, Acura follows the same underwritting rules so can be post BK friendly. Seems to focus on overall build versus just auto build post BK. 

 

-Nissan Motor Acceptance/Infiniti  Like Toyota, very Bk friendly with easy financing post BK with the right deal. Infiniti follows the same underwritting rules so I have read ppl leasing Q50's not long after DC. 

 

-Ford Motor Credit  BK friendly but wants to see a few months of rebuild post DC. Will not finance you straight out of BK even with prior Ford Motor Credit history. Once you have a few months under your belt, they are very BK friendly with a friend of mine getting 2.3% financing on a brand new Fusion just 4 months post DC. On the flip side, I have heard that if you burn Ford Motor Credit you are blacklisted for life. My client is a succesful business owner who burned FMC back in his 20s and still cannot get back with them even after 20+ years. He had to finance his truck through Cap1. 

 

-VW Credit/Audi  Not too BK friendly and would like at least a solid year of rebuilding before will consider. Definitely will consider once a year of payment history has been established (most likely with emphasis on auto rebuild). I have heard various opinions on Audi as Audi may have different underwritting rules. Some have said 5 years post BK is a good number some have said 2 years post BK. I have heard of VW letting someone back in around 2-3 years post BK after burning them with enough down, limiting their exposure. 

 

-Mercedes-Benz Finance  Surprisingly not too bad but does require at least one year of auto loan rebuild post DC to consider. Large volume dealers have seen approvals 8-10 months post BK with a solid auto loan rebuild but most times a year post BK with a solid auto loan rebuild is all it takes. Like FMC, I have been told that they blacklist for life if included in BK. MBFS is also big on total credit profile so tier bumps are not uncommon in some very surprising situations. 

 

Subprime Lenders

 

-Cap1 One of the more popular subprime lenders who are extremely BK friendly. Many get loans the day they are DC for $40k! Although, not the case if they were burned in the BK. This includes solely burning them for CC's. But like with their CC's, they are very forgiving and usually one year post C/O date is enough time to heal those wounds. 

 

-Consumer Portfolio Solutions  Specializes in post BK loans but with aweful customer service and high interest rates. They are the Credit One of auto loans. High fees for things like online payments, etc. If your profile cannot get approved with one the prime lenders then CPS may be the only option. There is always the option of refinancing post one year. 

 

-Santander  Specializes in subprime loans, although, hit or miss for post BK loans. I could not get a loan with them with 20% down post BK but my buddy got financed with only 10% for a more expensive car with less income a week after DC. Once again, depends on your pre BK auto loan history and the right finance manager who may or may not have relations with certain banks. YMMV

 

-Prestige Financial  Another finance company who specializes in post BK loans with extremely high interest rates (up to 24%) for used cars but mostly will finance anyone with verifiable income. I do believe you have to purchase a car from one of their "approved" dealers. 

 

Ally, Wells Fargo, and PenFed are said to be post BK friendly but I do not have enough experience to comment otherwise. As well, local CU's are a great source if there is a relationship there. Otherwise, a great finance manager always can go the extra mile in approving someone regardless of bank or brand. Always call around ask if there is a BK specialist in the finance department and skip the haggling with the salesman as he or she would have to refer to the finance manger regardless. (Update) Wells Fargo auto approved me a year and half post D/C for a second auto loan with 10% down and an ok-ish interest rate. 

 

 


 

 

BK7 08/2016 | DC 12/2016

Message 1 of 60
59 REPLIES 59
Frequent Contributor

Re: Bankruptcy Friendly Auto Loans Guide

I received my auto loan from Wells Fargo Dealer Services 4 months post CH13 discharge.  My EQ score at the time was 675 and my rate was 4.99.  Not the greatest but certainly not the worst!  Easy approval - entire purchase process took less than an hour.   I bought a used vehicle from a wholesaler and under my budget of $25k.  I did not put any money down. It was a lease return and appraised around $29k.  I had absolutely no issues with WF but refinanced with my local credit union 5 months later.  I want to build a relationship for future mortgage.  Rate was basically the same at 4.94.  I really would have liked to be under 3% but with the bk, it is what it is.  The credit union also gave me a $10k SL Visa.

 

My BK will be off my reports, with requesting an early exclusion, between March/May 2018.  

 

ETA: My previous auto loan was with Mercedes Benz Financial.  But my car had been paid off several years prior to filing BK.  This is my first auto loan in 14 years!  And it will be my last!!

FICO Score 8 as of 07/23/18
EQ - 770
EX - 757
TU - 741
Goal: 800
Message 2 of 60
New Contributor

Re: Bankruptcy Friendly Auto Loans Guide

Thank you, Thank you, Thank you. I was looking at Nissan since I still have clean loan history on my Transunion report and did not burn them in my Chapter 13. Just waiting for my discharge now so I can get the title to a car that was included and is now paid for. Scores aren't to far in the toilet at 647/596/608, and I have decent income and now very little debt! I'll stick with Nissan or Toyota. Fingers crossed.

Message 3 of 60
Valued Contributor

Re: Bankruptcy Friendly Auto Loans Guide

BK Friendly Auto Loan Guide: Buy a car you can pay for with cash.

Ch 7 Discharge May 2015
Discover/Target/NFCU CLOC/NFCU Cash Rewards/PenFed Power Cash Rewards/PenFed Pathfinder AMEX - $60k total revolving
EQ/EX/TU: FICO 8's Oct 2018: 700/685/671, 1% utilization/AZEO, INQ's: 6/2/4
Message 4 of 60
New Contributor

Re: Bankruptcy Friendly Auto Loans Guide

That's what I have now, and it needs an engine and transmission. I'll keep my cash in my pocket this time around and opt for something dependable instead of being broke down between Nashville and Atlanta again.

Message 5 of 60
Valued Contributor

Re: Bankruptcy Friendly Auto Loans Guide

Sorry to hear. That does happen sometimes.

 

I just hate to see people rush right back into debt after a BK. For me, I had finally gotten out of it and had no interest in going back. Now I'm socking away close to 40% of my income.

 

I love cars and have wasted waaaay too much money on them in my lifetime. A $1500 car vetted by a mechanic can get one around. A pretty darn nice car can be had for $5k. Any car has the risk of breaking, unfortunately. 

Ch 7 Discharge May 2015
Discover/Target/NFCU CLOC/NFCU Cash Rewards/PenFed Power Cash Rewards/PenFed Pathfinder AMEX - $60k total revolving
EQ/EX/TU: FICO 8's Oct 2018: 700/685/671, 1% utilization/AZEO, INQ's: 6/2/4
Message 6 of 60
New Contributor

Re: Bankruptcy Friendly Auto Loans Guide

I hear you but I think I got it this time. The chapter 13 trained me that way. I won't spend more on a note than I did every month on my trustee payments. I've been missing that money for almot 5 years now anyway so if I'm paying for a car atleast I'll gain an asset.

Message 7 of 60
Frequent Contributor

Re: Bankruptcy Friendly Auto Loans Guide


@SteelerNYC wrote:

Sorry to hear. That does happen sometimes.

 

I just hate to see people rush right back into debt after a BK. For me, I had finally gotten out of it and had no interest in going back. Now I'm socking away close to 40% of my income.

 

I love cars and have wasted waaaay too much money on them in my lifetime. A $1500 car vetted by a mechanic can get one around. A pretty darn nice car can be had for $5k. Any car has the risk of breaking, unfortunately. 


I am very fortunate that even with my auto loan I am able to save a large portion of my income as well.  For last few months, I've been saving 55-60 percent.  I am single with no dependents and I work in technology. Quarterly bonuses have really helped beef up my cash position.  And I have no credit card debt.  Trust me, I've learned a lot during my 5 years of BK!  Lessons learned even if it was the hard way.

FICO Score 8 as of 07/23/18
EQ - 770
EX - 757
TU - 741
Goal: 800
Message 8 of 60
Frequent Contributor

Re: Bankruptcy Friendly Auto Loans Guide


@BamBam2000 wrote:

I hear you but I think I got it this time. The chapter 13 trained me that way. I won't spend more on a note than I did every month on my trustee payments. I've been missing that money for almot 5 years now anyway so if I'm paying for a car atleast I'll gain an asset.


I totally understand what you are saying but a car is not an asset.  It is a depreciating liability.  Do what's best for your budget and you'll be fine.  But remember, assets appreciate!

FICO Score 8 as of 07/23/18
EQ - 770
EX - 757
TU - 741
Goal: 800
Message 9 of 60
Valued Member

Re: Bankruptcy Friendly Auto Loans Guide

What about during a chapter 13? I know it is HIGHLY NOT reccomended but just setting up with plan Z...


Starting scores Pre-Filing: High 400s. Gardening Until 06.2019.Utilization 3%/AZEO.
Current FICO 8 Scores as of 04.01.19:


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