Financing a car after Chp 7

[Anonymous]

Hello everyone. First, I wish everyone luck on their journey to reestablishing credit. Its daunting process but I plan to master it and get my score to 750+. I refuse to let a Bk dictate my credit worthiness. I am new to the board but not new the credit process. I am always purchasing my score from MyFico but never looked at the forum section, glad I did.  My question is in regards to a comment I just saw on here. She told someone that having a car financed through a finance company verses a bank will hurt your credit score. Is this true?  

I ask because my Chp 7 bankruptcy was discharged July 2008 and I just financed a car through Credit Acceptance (not the best company and the rates are sky high) 3 months ago. I owe about 8 thousand more on the car and plan to pay it off by next year to offset some of the high interest. Anyway, I am now concern with the comment made, as I had no idea it matter whether or not I financed with a bank or a finance company as long as I made my payments on time monthly. I just checked my credit report and my payments have been reporting for the past 3 months.

My goal is to buy a house next year as I will qualify for the FHA and I needed a car and figure this will help in reestablishing my credit. I plan to get a secured credit card as well.

Thanks in advnace for any help and feedback.

  EQ: 601  9/09TU: 602   9/09EX: 592   9/09 

[angie204]

I don't have an answer for you about whether or not there is a difference between bank versus a finance company.  I just wanted to comment, as our situations are similar.

I also had a chapter 7, and I also financed a car through Credit Acceptance.  The rate was 16%, but they approved me about five months after my bankruptcy.   I only had that account open for about seven months before I went to my credit union and did a refinance.  They opened two lines of credit for me, one was a loan for 90% of the actual value of my vehicle (in case I decide to sell it), at a rate of 6%.  The second was a signature loan for the balance (which ended up to be about $5k), at a rate of 10%.  My (combined) payments are $230 a month less than what I was paying at Credit Acceptance, and the signature loan will be paid in two years instead of 50 months. 

My scores jumped dramatically within a couple of months of the refinance.  Not sure why (maybe having two more positive lines of credit).  Just wanted you to think about a credit union as an option, if possible. :-)

Best of luck!