Buying a vehicle after bankruptcy can be a difficult process. Very few dealerships can help lower-end credit and recently-bankrupted customers, but here’s the good news: Go Auto can. In the next five minutes we’ll explain just how we do it. Don’t lose hope!
Many lenders see bankruptcy as a bad thing. We see it as a chance to help someone overcome their debts. We realize that people declare bankruptcy for a number of reasons, not just poor spending habits.
All we need to do today is establish the fact that you are a good candidate. And that’s easy.
So before we put you in touch with Go Finance, let’s address a few questions first.
Consumer Proposal vs Bankruptcy
Most people just assume that bankruptcy is their only option once everything goes to s#!+. But there’s also something called a Consumer Proposal. Consumer Proposals make make it easier to pay off large debts. Before we move forward, let’s establish which one would best suit you.
What’s a Consumer Proposal?
A Consumer Proposal is a legal agreement between a Licensed Insolvency Trustee and a creditor. The Trustee will act on your behalf to resolve the debts that are owed.
This provides you with protection from the debt collectors, and allows you and your trustee time to work towards an offer of repayment or partial re-payment of the aforementioned debt.
A Consumer Proposal is a less drastic measure, and it has softer consequences. While bankruptcy can seem an attractive option (the idea of “starting fresh” is enticing, obviously) it is a can be a difficult process and should be seen as your last resort, financially.
Consumer Proposals are usually better for both debtors and creditors. So before you jump to bankruptcy, consider a Consumer Proposal first.
What’s Personal Bankruptcy?
A personal bankruptcy is a legal arrangement that provides financial relief over unmanageable amounts of debt. Consumer Proposal payment arrangements are longer than bankruptcy arrangements. Bankruptcy discharges happen as soon as 9 months.
Your assets are transferred to a trustee. This trustee is appointed to overlook the bankruptcy on your behalf. Once discharged, debts will be taken care of.
Although similar, a Consumer Proposal and Bankruptcy are two completely different scenarios. Bankruptcy payments can vary based on your income whereas Consumer Proposal payments are based on the agreement between the trustee and your creditors (a fixed amount throughout the length of the proposal).
Financing a Vehicle After Bankruptcy
Three factors determine approvals for vehicle financing:
- The cost of your monthly bankruptcy payments
- The length of your bankruptcy payment term
- The length of time you have been in bankruptcy
The actual time that you have been in bankruptcy plays a significant role in getting approved for a vehicle loan. If you just declared bankruptcy last week, chances are you are not going to get approved. We recommend you wait at least 6 months after declaring bankruptcy before applying for an auto loan. There needs to be sufficient time to showcase to lenders that you can consistently pay off your bankruptcy payments on time before getting into another loan.
Step One: Getting a Trustee Letter
The main document needed to finance while in bankruptcy is a letter from your trustee.
This is absolutely crucial, as it will be up to your trustee whether or not you can even finance a vehicle in the first place.
This means you MUST be in good standing with your trustee. If you are behind on payments, it won’t help your cause.
Step Two: Choose a Realistic Vehicle
If you’re thinking about getting into a brand new Jaguar F-PACE while in bankruptcy, you may need to think again.
Be realistic with your choice of vehicle. There is only going to be a certain number of vehicles that fit your approval – units that align with your credit and budget constraints. You may need to accept a higher interest rate in order to start rebuilding your credit. Short term pain for long term gain.
Also, be patient. It may take time to get an approval as the dealership works with you, your trustee, and the lenders to make everything possible. Despite being bankrupt, the remainder of the financing process is generally no different than normal.
Getting approved for post-bankruptcy vehicle financing requires:
- Driver’s License
- Pay Stub
Buying a Vehicle After Bankruptcy with Go Auto
A car loan is one of the best ways to start rebuilding your credit.
Go Auto has specific credit rebuilding programs in place to help deal with any current or past bankruptcies. Go Auto Finance can look past the banks, because we can lend you the money ourselves, without the bank’s permission. Thanks to our success, we can use our own money.
It can be tougher to get an approval once you’ve declared bankruptcy, but it is definitely not out of the question.
If you can provide the necessary documents, and are realistic with your vehicle options, getting into a vehicle while in bankruptcy can happen with Go Auto!