Bad Credit Car Loans and Chapter 13 Bankruptcy
by Steve Cypher on Thursday, November 12th, 2009In the current economic climate it is very difficult to finance a vehicle with a bad credit car loan for consumers currently in a Chapter 13 bankruptcy.
What we do
At Auto Credit Express, we’ve spent the last twenty years helping consumers with bad credit improve their credit scores and reestablish their car credit by financing a new or recent pre-owned vehicle with a bad credit car loan. During that time, we’ve tried to educate consumers on the loan process, since bad credit consumers begin the process with a distinct disadvantage due to the high interest rates charged by these loans.
This means that if you’ve had a bankruptcy, slow pay, repossession or other bad credit issues, these dealers can give you the opportunity to drive a quality vehicle and reestablish your credit at the same time. Because they understand the bad credit car customer, you will be treated with the same respect as all of their customers – something that you may not have experienced if you’ve been turned down at a local dealer that doesn’t understand your current situation. Not only will you be treated with consideration, the process is quick, easy, and you can do it from the comfort and privacy of your own home.
We recently received this question from a consumer, “Im looking for a car while im in chapter 13 having a hard time getting a loan so i hope u can help me.”
Here is the answer:
It’s the economy
Current economic conditions – specifically the difficulty in obtaining lending capital to fund loans, especially high-risk ones – have led to some changes in the lending environment of bad credit car loans. In this instance, we’re talking about the inability of most consumers to obtain a bad credit auto loan while they’re going through a Chapter 13 Bankruptcy.
In order to buy a car while in a Chapter 13, borrowers are required to contact their Trustee and request that the trustee file a motion with the court to incur additional debt. If this motion is approved, the judge handling the case will issue an order to incur additional debt. In most cases, borrowers are required to furnish specific information about the vehicle, including its selling price.
In the past, these types of loans were not common, but because there were ample funds to support these types of loans, in many cases they got done. But with the current lack of funding, subprime lenders are looking at these loans as more trouble than they’re worth and they’re turning them down.
Is there a solution?
In the long term, the only solution to this problem will come when there is, once again, sufficient lending capital for lenders to go after the business. In the short term, however, it seems that very little can be done for consumers who need a car that are currently in a Chapter 13.
That being said, some people we’ve heard from have had some success renting a vehicle from a “rent to own” dealer or buying a vehicle from a “buy here pay here” dealer. The downside, of course, is that obtaining a vehicle from one of these dealers could be in violation of the court unless an order to incur is granted. This is also a service that Auto Credit Express does not offer.
The Bottom Line
Unfortunately, obtaining a bad credit car loan from a legitimate subprime lender, while in a Chapter 13 bankruptcy, is especially difficult in the current lending climate. Although this will certainly change with time, that is surely little comfort to consumers who currently find themselves in this situation.
For more information on the bad credit car loan process, consult our web site at www.autocreditexpress.com. If you have any other questions, feel free to contact us by email or our toll free number listed at the bottom of every web page.
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