Filing for bankruptcy isn’t an easy decision to make. Depending on your bankruptcy and situation, you may even need to give up your vehicle. Many Seattleites depend on a car to get them in, around, and out of the city. If you’re one of these people and you need a vehicle, there are two types of places that are the best car dealers for bankruptcies near Seattle. These dealerships can help you get approved for an auto loan and get back on the road, but you need to follow a specific process if you're in an open bankruptcy.
The Best Car Dealerships for Bankruptcies in Seattle
There are many different types of dealers in Seattle and Washington state. It can be difficult to know which one to choose for a bad credit situation, especially if you’re dealing with a bankruptcy.
Typically, you need to choose between these two types of dealerships:
- Special finance dealerships – These dealers work with subprime lenders. Subprime lenders specialize in bad credit car financing, and don’t place as heavy an emphasis on your credit score for approval. Since they look at your score, they’re going to see the bankruptcy on your credit reports, but they consider other factors such as income, down payment, and residency. The biggest benefit to financing through a subprime lender is that because they report loans and on-time payments to the credit bureaus, you can improve your credit over time.
- Buy here pay here dealerships – Buy here pay here dealers are also lenders. What makes these places different is that many do not check your credit, instead basing your approval on your income and what you can afford. This means they likely won't even see the bankruptcy listed on your credit reports. Although it’s usually easier to get approved at a buy here pay here dealership, it often comes with few trade-offs. For example, some of these lots don't report loans or timely payments to the credit bureaus, which means you can't improve your credit score with one of these loans.
With both types of dealers, you typically need to have a down payment and your interest rate is generally going to be higher than average. It's part of the deal for getting an auto loan during a bankruptcy. At the same time, you can save money by making a larger down payment, and you may be able to refinance and get a lower interest rate in the future if you improve your credit score.
Keep in mind that the process is different if you're in an open bankruptcy. If this is the case, you need the court's approval before you can buy a vehicle during a bankruptcy, which means you have to follow a specific process.
Getting a Sample Buyer’s Order and Approval
Regardless of if you file a Chapter 7 or Chapter 13 bankruptcy, lenders like to see that a bankruptcy has been discharged before offering credit. But this isn’t always possible, and you may need to apply for financing with an open bankruptcy.
No matter which type of dealership you choose, you need to get a sample buyer’s order from the dealer you plan to work with first. This needs to lists the car, the selling price, and the highest possible interest rate you could qualify for. Make sure it includes the phrase "or similar" next to the model you choose – this prevents you from having to start the process over if the vehicle you pick is sold while you're waiting on the final word from the court.
You can then take the buyer's order to your bankruptcy trustee. They're going to look it over and ask for an explanation as to why you need a car right now. If the trustee agrees, they’re going to file a motion to incur additional debt with the bankruptcy court, where you may need to attend a hearing.
If the court approves the motion, you’re given an order to incur additional debt, which you can bring back to the dealership to complete the financing process.
Need Help Finding a Dealership in Seattle?
Filing for bankruptcy should be a last resort option. If you fear you’re going to miss the next month’s payment, talk to your lender ahead of time and let them know your situation – they're often willing to help you.
If you’re a Seattle resident dealing with bankruptcy, Auto Credit Express wants to help you find a dealer to work with on your auto financing journey. For over 20 years, we’ve helped bad credit car buyers find auto loans by matching them with special finance dealerships near them.
Even if you don’t live in Seattle, we can help you get connected to a dealer that knows how to handle bankruptcy financing. To get started, fill out our easy and free car loan request form right now!