Auto refinancing and bankruptcy is not only possible but often necessary. Even if you have declared bankruptcy it is necessary to have a car. You will more than likely need to do auto refinancing after bankruptcy. This may be a new financial situation for you as it may cause you to get involved with a sub-prime car loan. There are things you need to consider to improve your financial situation in terms of your vehicle.
Note, this page focuses exclusively on auto refinancing and bankruptcy. If you are interested in some of the other refinancing options or articles, see the links below.
OK, on with the auto refinancing and bankruptcy details.
How long will you need a sub-prime loan for?
If you are only able to qualify for a sub-prime loan when it comes to your vehicle, you need to evaluate how long you will be paying the larger payment. Typically these loans require higher interest rates and higher payments. A car salesmen will insist that you will only pay on a loan like this for one year. This may, or may not be the case depending upon the terms of your bankruptcy. A credit counsellor should be able to help you assess your current credit capability. You should be comfortable making the payment for the long term, assuming that nothing else changes, so that when you are able to refinance it will be just an added bonus.
Know the value of your auto prior to refinancing
You will need to research how much your car is worth. Are you upside down? Or, do you owe less than the value of the car. If you owe less than the value of the car, there will be a few more options. A good place to verify the value is at www.edmunds.com.
Consider auto refinance at a bank or credit union
It can be very difficult to get auto refinancing during bankruptcy, through your current lender. It is a good idea to seek a loan through a bank or credit union. Their terms are probably more favorable and they may be a little more understanding to your situation than an auto financing company would be.
After bankruptcy, consider a trade-in
If your vehicle is worth less than what you owe, you can trade your vehicle for another vehicle with a lower payment. If you are in a situation where you own more money than the vehicle is worth, don't despair there are still some options to pursue. You will be able to offset the cost of your "upside-down" loan by requesting to buy a car that's been on the lot for an extended amount of time. These vehicle will usually have a rebate that will be able to cover the difference in what is owed on your vehicle.
Remember your car is not your image, you can even consider taking advantage of public transportation. Be proactive or you will constantly be stuck paying high interest loans. Find out how to fix and improve your credit after bankruptcy so you are able to seek auto refinancing at aggressive rates after bankruptcy.
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