Buying A Car After Bankruptcy – How To Go About It

If you have been asking yourself ‘Can I buy a car after bankruptcy’; the answer is ‘Yes’. But before you go looking for ways and means for buying a car with bankruptcy, you should challenge your decision of buying a car in bankruptcy. If your finances are not in order (and bankruptcy is a proof of that), then can you really afford to buy a car? Can you postpone the purchase further till you are in a more comfortable financial position? Think over it and think about what are the other options available to you.


Here are few things that you must surely consider in terms of options (some or all might be applicable to your situation):

  • If you already own a car, then consider continuing using it till the time you can. If it requires some minor repairs that won’t cost much, then go for these repairs and postpone the purchase of car as much as possible.
  • If you don’t already have a car, then consider using the bus or public transport. It might work out well for you and you would also save on running costs.
  • See if it is possible to borrow a friend’s car. Maybe a friend has a spare car which he/she can easily lend to you for some time.

Think it over and see if the car purchase bill fits in your overall financial plan. And if you have not yet made your financial plan then chalk it out immediately with due consideration to your long-term/short-term/medium-term financial goals, your debt, your income, expenses, assets and your emergency fund requirements.

How to buy a car after bankruptcy?

If, after evaluating all the alternatives for avoiding the purchase of a car after bankruptcy, you still find it a financially feasible option for you, then consider the following:

  • Look for an inexpensive car that will address your travel issue. Basic functionality is what you should focus on and not the bells-and-whistles.
  • Instead of buying a new car, go for a used one that will still do the job for you but will cost much less.

In any case, your focus should be on getting a car that is in good working condition but doesn’t cost you a lot of money. Both things are important – ‘condition of the car’ and ‘its price’. If you buy a used car that is not in good condition then you will end up spending more money in its maintenance and repairs. And if you try to spend too much money on buying a car then you would be making yourself more vulnerable (financially). Your focus after bankruptcy should be on building your credit score and on ensuring that you have a financially secure future.

Getting a car loan would be really difficult for you (and almost impossible if your bankruptcy is not fully discharged yet). However, there are lenders who do grant car loans to people with bad credit. But while hunting for such a lender, do not compromise on reliability (of the lender). It is important to note here that car loans offered to you would be at higher interest rates as compared to those offered to people with good credit history. Even the terms, fee etc. would not be as favorable for you as for people with great credit scores.

Moreover, the lenders would make several additional checks on you and your finances before actually approving your car loan. Such checks would include checking your sources of regular income and your credit history after your bankruptcy discharge (whether you have been making all your payments on time and in full or not).

Once your car loan is approved, make sure that you make all your monthly car loan payments in time. This will prevent you from unnecessary late fees and at the same time help improve your credit score over a period of time.

In any case, you should seek advice from a well reputed professional/lawyer who deals in matters relating to buying a car after bankruptcy.

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