New Car Loans

[Anonymous]

Hello,

I have a creditors meeting on 9/11 which I am planning on getting rid of my  car since the interest rate is 29 percent and I owe so much than it is worth.  So I am looking around for new cars.  

I had a dealer say that he could get me a new car without going to the creditors meeting and having a discharge.  The interest rate is 16.9 which is still pretty high.   I asked him if he thought I would get a better interest rate once my bankruptcy is discharged and he said no, the rate is based on your credit.   So should I wait?  Does anyone have any experience with this?  

My credit is horrible at 490 or something now and I was late with my car payments for the car I still have now.   I'm just worried come sept 11th when I have my meeting with the creditors that I will have to surrender my car and end up with no car so I'm worried.

Should I wait to get a car?

How long after the meeting of creditors do you need to surrender your car?

Thanks for the help.

[bstone]

Based on my experience the rate is decent given your score and the recent BK.  We financed a van pre-341 at 18% through Prestige and financed a car the day after discharge at 17.2% through Chase.  After six months of rebuilding we were able to get 8.8% through Ally, and hopefully will be able to refinance that to 3-4% later this year.

My suggestion would be to keep your current car, clean it out and drive it until they take it.  Save your payment for a down payment on a new(er) vehicle.  Best of both worlds here: after discharge your rate may be slightly better and you'll have money for a down payment.

[TRC_WA]

I got 8.9% about 3 days out of discharge in 2013... refinanced that to 3.99% in 2014.... then bought a new $40k car with $0 down at 4.49% in 2015... that I will refi to 1.99% in the next few months after everything bad falls off my reports.

I didn't get stuck with the super inflated interest rates because mine was a Ch 13... not Ch 7.

In this case the type of bankruptcy filed influenced the lender decision... I was told that directly from the loan officer who said Ch 13 isn't frowned upon nearly as much.

[CH-7-Mission-Accomplished]

---

@Anonymous wrote:

Hello,

I have a creditors meeting on 9/11 which I am planning on getting rid of my  car since the interest rate is 29 percent and I owe so much than it is worth.  So I am looking around for new cars.  

I had a dealer say that he could get me a new car without going to the creditors meeting and having a discharge.  The interest rate is 16.9 which is still pretty high.   I asked him if he thought I would get a better interest rate once my bankruptcy is discharged and he said no, the rate is based on your credit.   So should I wait?  Does anyone have any experience with this?  

My credit is horrible at 490 or something now and I was late with my car payments for the car I still have now.   I'm just worried come sept 11th when I have my meeting with the creditors that I will have to surrender my car and end up with no car so I'm worried.

Should I wait to get a car?

How long after the meeting of creditors do you need to surrender your car?

Thanks for the help.

---

This is off topic, but I would offer a little advice.  Most people who have gone into bankruptcy immediately go out and buy a much more expensive vehicle than they need, put little or nothing down, finance it for the longest term  possible and get a horrible interest rate.  This is going from old bad financial decisions to new bad financial decisions.

If you are buying a "modest" priced vehicle, say 15K - 20K, it might be okay to go with new, but otherwise I think people who are facing 28% or 16% or 9% interest rates fresh out of BK should buy a dependable low cost used car that is like three or four years old from a major dealer (not a buy here, pay here place).  By all means get a certified used car if you can find one.

It is much better to be paying high interest on a 10K or 12K loan than on a 35K loan.  Then after a year or two you can buy a new car if you want one.

Buying high priced cars with little down at high interest rates for long periods of time (more than 60 months) is an invitation to be completely upside down and possibly be stuck with your BK high rate financing forever.  Then you wind up rolling the 5K or 8K negative equity into a new car loan down the road.

Just my two  cents.