Buying a Car in a Bankruptcy
A car may be the most expensive item you buy,
A car may be the most expensive item you buy, right after a home. Yet, most of us go blindly in, thinking we got one over on the auto dealer. Think again. The auto dealer does car deals day in and day out while you do it once every few years . . . Who do you think is going to get a good deal? Probably not you!
Buying a Car in a Bankruptcy – You can buy a car immediately after filing a chapter 7 bankruptcy, and anytime in a chapter 13 bankruptcy. In a Ch 13 bankruptcy, you must get court permission to go into debt more than $10,000 and this can take over a month.
Still you can get a good deal, but you must be prepared.
Deciding whether to purchase a new or used vehicle is the first step.
While a new car devalues by $2,000 or more as soon as it leaves the lot, it often offers better interest rates.
On the other hand, a used vehicle may still be under warranty and could be a worthwhile investment, although there is the risk of buying someone’s nightmare.
I recommend a used car
At Cameron Bankruptcy Law, I recommend considering a used car that is two years old. Opting for a slightly older vehicle can significantly reduce the price. Additionally, since the previous owner has had it for two years, the likelihood of it being a problematic or unreliable car, commonly known as a “lemon,” is considerably lower.
Determine the best vehicle
Determine the best vehicle for your needs and pocketbook. Research vehicles on Consumer Reports and similar websites – look at reliability, depreciation, and mileage, as well as looks and price. Also, don’t forget the insurance rates. The more bland the car, the lower the insurance rates. A 2-year-old Toyota Camry is a good deal for price, reliability, depreciation, mileage, and insurance. It may not make your heart race, but it will be kind to your wallet.
Now, look for a good car loan to get the best car deal.
A pre-approved loan is crucial, even if you don’t intend to utilize it. It demonstrates your dedication and provides an interest rate for other offers to beat. In the case where a car dealer secures a loan for you at 11%, they typically include additional interest points for themselves, resulting in a final rate of, let’s say, 14%. This 3% increase translates to $1,421 over a four-year period for a $20,000 car loan. Keep in mind, that there is always room for negotiation.
Now research car dealers.
Going with a national brand is the safest way to go, but look at reviews. These small used car dealers are most likely to rip yu off. Don’t be afraid to drive a little for a good deal. Many dealers have buying incentives like free oil changes or free power train warranties. Decide what is important to you.
Ok, you have done your research
Okay, you have conducted thorough research and identified the specific car and year that you prefer. Additionally, you have found a couple of alternative options and obtained an approved car loan. It would be beneficial to print out your research and bring it along with you.
When looking at a used car, always get the CarFax – but pull it yourself, don’t accept one from the dealer. Dealers are known to make fake CarFaxs and also give a CarFax report for a similar vehicle instead of the one you are thinking of buying.
DON’T let them know you have done your due diligence.
By knowing what the specific car you are looking for should sell for, and what interest rate you can get you have an advantage over the dealer. Remember the dealer wants to sell you a car at the best rates he can get – not a specific car for terms favorable to you.
An auto dealer can give you a steal of a price but then tag on a few percentage points of interest to make up for it. They can also do the opposite.
Car dealers can also make a lot of money on add-ons, so be careful and decide what you want BEFORE you approach the dealer. Everything is negotiable!
The age of a car.
The longer a car sits on a dealer’s lot, the more incentive they have to sell it to you. Car dealers borrow money to buy cars, and the interest rate keeps ticking until the car is sold. This is called the age of the car. Knowledge of the age is power.
The end of the month national brand dealers can get bonuses from their brands (Ford, Toyota etc) if they sell a specific number of vehicles. If the dealership is close to the next tier of bonuses, they can be HIGHLY motivated to sell you a car!
Dealers are know to give better deals at the end of the month when they are trying to to make their quotas!
PLEASE! Refer your friends to Cameron Bankruptcy Law or write a brief online review!