A number of our readers may wonder what shopping for a car will be like for them after they emerge from bankruptcy. Specifically, they may wonder about qualifying for a loan at all, much less financing that they can reasonably afford. After all, they may be insecure about their credit rating as a result of a recent bankruptcy. These are legitimate concerns, especially considering how predatory lenders still operate in the used car market.
Nevertheless, car shoppers can (and should) do their homework and protect themselves against unscrupulous dealers. The following tips should be helpful in avoiding auto financing traps.
Know the lending market – TV commercials and slogans touting “Bankruptcy! No problem!” are designed to get you to the lot, especially during Memorial Day weekend; but you should also know what your credit score will earn you on the open market. A snapshot of what you can expect can be found on MyFICO.com. This way, you won’t be swayed by dealers who offer high interest loans and say that they are doing their best.
Get everything in writing before closing – While it may sound good when a salesman says that he can get you great financing, it is essential to sign off on the terms in writing before driving off with the car. To that end, be wary of financing agreements that say “subject to final approval,” especially when the dealer lets you drive away without a final contract. It is not uncommon for the dealer to call back (sometimes days later) to inform the buyer of the real interest rate and monthly payment.
The preceding is not legal advice.