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Should You go for Auto Financing a New or Used Car after Bankruptcy?

When it comes to choosing a car it can often be a difficult decision especially when you are trying to decide if you want to purchase a new or a used car on auto financing. Throw into the fact that you have just come out of a bankruptcy ordeal and you are bound to be confused. Now I would say that the decision you make is primarily dependent on how bad you need a car. There are a number of reasons why purchasing a used car on auto financing will make sense and then there are many reasons that would make purchasing a new car on auto financing make sense. The trick here is to weigh in the plus and minus points of both options in order to help you make the right decision.

Interest and fees after bankruptcy

Officially once your bankruptcy has been discharged you are free to go for auto financing whenever you like or any other form of loan you need. The problem is that you are going to have to pay large fees and very high interest rates. Many financial experts often advise that you wait for around six months to a year before you apply for auto financing.

So what type of interest rate can you expect on auto financing after bankruptcy? Well generally you will get an auto financing quote which is around three percentage points higher than what is normally sanctioned. This will have an effect on your monthly car payments as well as what you end up paying when the duration of the payments are over. If you can really do without a car it would make sense to wait until your credit improves.

People who are looking to improve their credit rating in order to get lower interest rates on auto finance need to get new credit accounts. Bankruptcy gives you an opportunity for a fresh start and in doing so you should be get new credit cars, department store cards etc in order to start improving your credit score. Maintain regular payments of your credit line and in a few months you can improve your score which will justify that you receive a better interest rate.

When choosing a lender make sure that you check out the rates around your area. You can even get good interest rates online if you are willing to shop around.

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