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Buying a Car after Bankruptcy: Misconceptions vs. Reality
Is bankruptcy an obstacle to get your next dream car? Well, not anymore. Misconceptions such as a ruined credit score and limited car purchasing options can keep you from applying for auto loan. The best solution is to purchase discontinued car...
Many people who file for bankruptcy think it is impossible to obtain additional financial assistance. Misconceptions cloud their thinking and it sways them from the real scenario. However, with the help of certain guidelines and the right mindset, you can obtain an auto loan for buying a car.
Buying a Car and Bankruptcy: Common Misconceptions to avoid
Reality: Bankruptcy may be a temporary halt but it is not the end of your financial journey. The common misconception is that a person suffering from bankruptcy will not get approval for any loan. However, the reality is different. A bad credit auto loan is the best option available to individuals with bankruptcy. The probability of obtaining approval for a bad credit auto loan increases as the loan is designed for individuals with credit issues. Thus, put your efforts in researching for lenders who provide bad credit auto loans and getting your dream car will not seem like a distant dream.
Reality: A credit score is made up of numerous factors such as the types of credit, amount of your debt, credit history and payment history. The situation of bankruptcy helps you to eliminate most of the elements that create a negative impact on your credit report. Additionally, the debt-to-income ratio of people after bankruptcyis better than the one prior to bankruptcy. Therefore, obtaining an auto loan is a chance to improve your credit score provided you make the payments on time.
Reality: While it is advisable to be calculative in making future financial decisions, the options of purchasing the types of cars are not limited. A person who recently suffered bankruptcy is open to purchasing new cars as well as old cars. The best alternative to a used car is a discontinued car model. Purchasing a discontinued car model helps you to obtain a new car for a budget-friendly amount. Also, the car dealers are eager to sell the discontinued car model to free their shelf space. Therefore, a discontinued car model will help you stay in your budget and allow you to get your hands on a new car.
Today, bankruptcy does not carry the negative stigma that it carried two or three years ago. Many lenders are aware that bankruptcy occurs due to business failure, decrease in income, loss of a spouse or any other unexpected crisis. Yet, misconceptions occupy the minds of people and force them to avoid applying for an auto loan. However, with a little market knowledge, enough courage and the right mindset, you can get one step closer to the car of your dreams.