If you’ve filed for a Chapter 13 bankruptcy, and are wondering just how to get approved for an auto loan, know that you’ll need to approach your trustee first.
Notifying Your Trustee
In order to get an order to incur additional debt from the court, you must get a sample financing statement from a dealer. From there, the trustee will file the motion with the court. Within the order, you must describe in detail why you want to take on a car loan, and how you’ll be able to afford it. When compiling the letter, there are three topics you need to cover:
- Need for vehicle – Explain why you need a new car during bankruptcy. Maybe it’s because your old one broke down, or you acquired a new job and need a newer, more reliable, and/or fuel efficient vehicle. If you state that you want this car as a second vehicle or just want a flashier car, your trustee will more than likely deny your request.
- Your budget – It’s important you mention that you’re able to afford a car payment while still undergoing a bankruptcy. To do this, come up with a budget plan and write the numbers down in the statement. You can use online tools and calculators to come up with an estimate for an auto loan – just make sure your budget is realistic.
- Vehicle type – Once your budget is set, you’ll need to get a buyer’s order from the dealer listing the year, make, model, and mileage of the vehicle – or similar – you qualify for. Also, make sure the maximum interest rate is listed, too. The important thing to remember here is to not shoot for luxury. Even if you’re able to afford a luxury car, a trustee can still reject your motion based on the vehicle type. There are many car choices that make more sense.
When you’re ready to meet with your trustee, come prepared with your information and all documents that support your request. Your trustee may have questions about your need for a car, so be prepared to answer them. And, of course, ask your trustee any questions you may have about the process. Generally, your trustee will contact you regarding an approval or denial a few weeks after the motion is filed. If you’ve been approved, you can pick up the paperwork from the court and bring it to the dealership to complete the auto loan process.
The Bottom Line
The trustee’s role is to oversee your case during your bankruptcy. If you need a car during an open bankruptcy, your trustee will need a statement with a detailed explanation before they can file the motion.
On the other hand, if your bankruptcy has recently been discharged and you’re looking for a vehicle, but don’t know where to turn, let Auto Credit Express help. We specialize in connecting credit-challenged car buyers with dealers that have these types of lenders. We work with a network of dealerships all across the country that have the right lenders for unique credit situations. Get started today by filling out our free online auto loan request form.