Buying a Car in a Bankruptcy
Auto Warranty
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.
The first thing is to decide is if you are buying a new or used vehicle. Depending on the model, a new car loses about $2,000 as soon as you drive it off the lot. A used vehicle may still be under warranty, and could be a very good buy – or you could buy someone’s nightmare.
I recommend a used car
that is two years old. The first two years can bring the price down 10K, and since the previous owner had it for two years, it probably isn’t a lemon.
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 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 on your wallet.
Now, look for a good car loan to get the best car deal.
This is important, even if you don’t plan to use it. A pre-approved loan will show that you are serious and gives them an interest rate to beat. When a car dealer gets you a loan for say, 11%, they add a few interest points on it for themselves, bringing it to say 14%. That 3% hike means $1,421 on a four-year loan of a $20,000 car. Yes, they always have wiggle room.
Now research car dealers.
Going with a national brand is the safest way to go, but look at reviews. 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
and found the car and year you prefer, with a couple alternatives and an approved car loan. Print out the research to take with you.
DON’T let them know you have done your due diligence.
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!
PLEASE! Refer your friends to Cameron Bankruptcy Law or write a brief online review!
(919) 627-7748
