Credit After Bankruptcy For an Auto Loan

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    Credit After Bankruptcy

    It’s easy to get credit after bankruptcy to buy a new car. But, many people unnecessarily put off filing bankruptcy because they think they won’t get credit again.  And, it really isn’t that hard to buy a new car when your credit isn’t the best.

    In fact, it may be much easier to get credit after bankruptcy than it is right now if your credit is already bad.

    As a potential buyer, you have leverage over a car dealer.  Even with credit that is less than perfect. And, you can almost always do better than a car dealer’s first offer.

    credit after bankruptcyThe lawyer fee for a Los Angeles bankruptcy case starts as low as $775.00 + filing fee* with the Bankruptcy Law Firm of Bayer, Wishman & Leotta.

    How to get credit after bankruptcy and a better car deal

    Credit After Bankruptcy
    “I’ve got to get a new car.”

    Getting credit after bankruptcy is not the problem. Credit is always available, at a price. The real problem is the same problem every consumer has – getting the best deal possible. Many people wind up in bankruptcy because of getting a bad deal when they finance a car. If you know what those mistakes are, you can avoid making them. Don’t settle for a payment that you really can’t afford.

    Don’t be afraid to drive a hard bargain and save yourself money. And, don’t think you won’t get credit after bankruptcy. A bad car deal could lead to a repo. And, a repo can lead to another bankruptcy. It happens all the time.

    Get started fresh. Call 800-477-3111.

    All consultations are handled personally by Jeff Wishman or by Leon Bayer.

    This is how a bad car deal happens

    Your typical bad car deal starts off at the beginning of your typical bad day. Maybe, something like this:

    credit after bankruptcyYou wake up with lots of worries. You need a new car. Your old car is on it’s last legs. Your credit is not so great. You have had a bankruptcy. You had trouble sleeping last night. Only one thing could make you feel worse. A visit to the car dealer. You are dreading it.

    You have put this off for weeks. Your stomach is in knots and you are worried you can’t get a car. Will the dealer embarrass you because of your bad credit? Could your old car die on the way to the dealer? Some people say you won’t get credit after bankruptcy. You are so worried that you don’t know what to believe.

    You know the old saying,  “Beggars can’t be choosers?” Well guess what? YOU ARE NOT A BEGGAR.

    Credit After Bankruptcy
    “I didn’t realize my credit was that bad.”

    With credit problems, you are more likely to buy a car from any car dealer that gets you financed. Your lack of options has conditioned you to take what they offer. You are beat before the fight even starts. Car dealers know that.

    The first thing a car salesman wants to do is run your credit. Believe it or not, the salesman is happy if your credit comes back only “so-so.”

    The salesman knows a customer with less than perfect credit will probably be a buyer if they can get you financed.

    Credit After Bankruptcy
    “Kid, this is the perfect new car for you.”

    Let’s expose how they do that.

    Car dealers make money two different ways on a car.  First, they make money on the actual car, (including incentives from the manufacturer).

    But there is a second, secret profit zone built inside every deal.  A car dealer also makes money on the financing. Most consumers never know about this. And, those who do know often don’t give it enough thought.

    The dealer may leave you alone for a few minutes while the dealer calls a bank for an advance commitment to buy your loan. Then the dealer comes back and proudly announces that your loan has been “approved.” You sign with the dealer. The dealer immediately turns your contract around by selling it to the bank for a profit.

    There’s more you don’t know. An extra profit can be earned by the dealer from charging you a higher interest rate than the bank has quoted. The higher the rate, the more money a dealer makes. The bank pays the most money for contracts with higher rates. The higher the interest rate, the more money a bank makes. The more money they stand to make, the more a bank is willing to pay the dealer to buy your car loan.

    Here’s an example of how the dealer pulls it off.

    Let’s say the bank has approved your loan at 6% interest. The dealer knows that, but you don’t. The dealer won’t tell you that. That’s because the dealer wants to sign you for more than 6%. The dealer says something like this:

    “Your credit isn’t good. You know that. The banks really don’t want you. But, I really want to help you out. I have a friend at the XYZ bank who owes me a favor. I just called in the favor he owes me. That’s the only way I could help you. I got him to finance you at 10%. It’s not great, but it’s the best someone in your position can expect. With your credit, no other dealer can get this for you. You think, maybe it’s better take that deal right now before that guy changes his mind.”

    You don’t like it. But, you take the deal because you believe what the dealer said. Suddenly, you are feeling much better. Maybe the dealer really did you a favor? You tell yourself he is a swell guy.

    Los Angeles Bankruptcy Attorneys
    “I just love the car business. So I says,10% interest is a good deal, and she believed me!”

    Here is what really happened.

    The car dealer is now selling the bank your contract which carries 10% interest. The bank would have been happy with 6%. However, a 6% loan would not make as much money for the dealer. That extra 4% difference translates into huge, extra dealer profits. Instead of selling the bank your 6% contract and gaining a premium of $500, the car dealer can now sell your 10% contract and earn a $2,000 premium.

     

    Here’s the bottom line. Anything that one dealer can do, they all can do. Nobody is going to do you a favor. Suppose a dealer offers you a contract at 10% interest.  You can probably demand 6% and get it. The dealer knows you can get the same deal from any other dealer. The dealer does not want you to walk. To keep you from walking, the dealer will agree to cut his margin. You will get the 6% loan, or something close to it.

    It’s just that simple. Remember, you have leverage, even when your credit is not the best. A buyer always has leverage to get a better deal than the dealer’s initial offer. This is true, even if you have bad credit. While it is true that bad credit will keep you getting the lowest rates, you can always do better than you thought.

    Cheap Bankruptcy Lawyer Near Me

    cheap bankruptcy lawyerThe lawyer fee for a Los Angeles bankruptcy case starts as low as $775.00 + filing fee* with the Bankruptcy Law Firm of Bayer, Wishman & Leotta.

    Get started fresh. Call 800-477-3111.

    All consultations are handled personally by Jeff Wishman or by Leon Bayer.

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    Leon Bayer and Jeffrey Wishman are Los Angeles Bankruptcy attorneys. They have been practicing bankruptcy lawyers in Los Angeles for 37 years and are Certified Bankruptcy Specialists by the State Bar of California. These are lawyers who bring experience, skill and creativity to the highly complex area of bankruptcy law. At this Los Angeles law firm, the your initial consultation with an expert is free. Mr. Bayer is a coauthor of Nolo's The New Bankruptcy: Will It Work for You?, authors the “Ask Leon” series on Nolo’s Bankruptcy, Debt & Foreclosure blog, and writes on bankruptcy topics for Nolo’s website. In addition, Mr. Bayer devotes a significant number of hours to volunteer legal services. The State Bar of California has commended Mr. Bayer for this work every year since 2004.

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