Effective tips when buying a new car after bankruptcy

Effective tips when buying a new car after bankruptcy

Posted on June 30, 2022

Today, we are going to discuss the steps you should take when trying to buy a new car after bankruptcy in Niagara Falls. We understand that this is a sensitive topic, especially since no one wants to talk about their financial challenges.

Bankruptcy is not the end, just a new beginning

In the past, bankruptcy was considered the financial end of a person, one they could never recover from.

Thankfully these laws are in place to give consumers a fresh start. Anyone who thinks they are immune from bankruptcy is mistaken. The average Canadian is a mere $200 away from financial strife, so it could happen to anyone.

After you have been fully discharged from bankruptcy, your trustee will issue a document which is your official discharge; without that document, you cannot legally take on any new debts.

Once you have the discharge document in place, you can start rebuilding your credit.

Why you need to rebuild your credit

The bankruptcy would have removed your legal obligation to repay your debts, but it (the bankruptcy), along with those bad debts, will stay on your credit report for up to seven years.

Any prospective lender would have misgivings about approving any type of new credit facility until you have demonstrated your ability to handle your finances.

What you need to do in this particular situation is sign up for secured credit products like those being offered by HomeTrust and Capital One Bank.

These secured credit facilities are guaranteed approval and will give you the ability to start rebuilding your credit score.

It could take a few months before your credit score exceeds 600, which is the minimum score needed to qualify for most conventional credit products.

Fine-tuning your car-buying budget

You have taken the first big step, which is working on rebuilding your credit score, but that is just the first of many steps to take.

While you are waiting for your credit score to improve, this is the time to start working on your budget. Do you know how much cash you have left over every month that can go towards your new car payment?

You can easily spend $500 a month on a car payment; this doesn't factor in insurance, maintenance, and fuel. So, to be safe, aim to have at least $1,000 put aside to cover all of your vehicle-related expenses.

The bankruptcy should have wiped out all of your debts, so you should have plenty of room in your budget to afford a new car.

Where to get approved for a car loan after bankruptcy

You are still not out of the woods yet; you will need some expert help if you want to get a decent car loan after bankruptcy.

The best option is to contact dealerships in your community that specialize in helping drivers like you get approved for a car loan, even when they have weak credit.

These dealerships will also show you the simplest and easiest way to raise your credit score so you never have to worry about paying high-interest rates again.

Contact Unique Chrysler for help, advice and competitive Niagara Falls car finance and leasing.

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