OK, you’ve filed bankruptcy. Your credit isn’t great, but you need to buy a car.
So you go to the local car dealership and believe the salesman when he says…
“Buy this car today at this high interest rate and we’ll refinance you in 12 months at the lowest interest rate possible.”
Recovering from bankruptcy is easier than you thought! Time to celebrate, right?
Don’t Believe Everything a Car Salesman Tells You
Every day car dealers repeat the “refinance in 12 months” lie to bankrupt people to push them to purchase cars at extremely high interest rates. You may have financed a car through a high-interest lender knowing that it’s not the best choice. But you probably thought it was your only option at the time and you justified it by thinking you could refinance to a lower interest rate later.
But, when you try to refinance the car months later, you find out the car dealer lied to you.
Best Way to Refinance a Car After Bankruptcy
The first thing you need to determine is whether you qualify to refinance, or if you’re better off just selling or trading-in your car. So let’s start with how much your car is worth.
The biggest mistake most people make when determining the true value of their car is they base their research on the private party value. You need either the trade-in or dealer retail value. junkyards near me
Here’s how to get the value of your car…
Step #1: Go to Edmunds.com. I think Edmunds is one of the best all around automobile sites on the web.
Step #2: When you get on the front page, click on “What’s your car worth?” It’s written in small type and a little tough to find, but it’ll be somewhere on the main page. Or you can go straight to the Used Car Appraiser.
Step #3: Follow the steps and click on the make, model and year of your car.
Step #4: Fill in the vehicle details and any optional equipment your car has.
You’ll see three different values for your car: Trade-In, Private Party and Dealer Retail. The two values you need to pay attention to are Trade-In and Dealer Retail.
Some lenders base their refinancing on the trade-in value and others on the retail value. Ideally, you want to find a lender that uses the retail value, as it’s always higher.
Now that you know the true value of your car, the next step is to call and get your loan payoff from your lender. Loan payoff is what you still owe on the car.Getting a hold of your lender may be tricky. If you’ve defaulted on the loan, your auto lender may cut off all communication with you. So, if you’re having a tough time getting through to your lender, ask for the collections department. They’re your best bet for getting through to a live person.
Ask what the payoff on your car is. If you’re leasing the car, be sure to add the total remaining payments, residual amount and any early termination fees the lender requires so you get the true payoff amount