How to Buy or Lease Another Car After Bankruptcy

by Lisa
(Michigan)

Question: I need to know how to buy or lease another car after bankruptcy. I filed Chapter 7 Bankruptcy and was discharged in January of 2010. I was able to keep my leased vehicle and I have made all my payments on time.


Well my lease is up on August 1, 2011. I was with GMAC for ten years which is now Ally. I called them to see if I could extend my lease and they denied me because of the Bankruptcy.

The problem is that I lost my job a few months ago and I have constantly been looking for work with no luck yet. I'm currently receiving unemployment.

Is there anything I can do to try to get another lease or keep my current vehicle? I have never had a late payment.



Answer: Hi Lisa,

Buying a car after bankruptcy is not all that difficult, but leasing is typically not an option. Leasing typically requires a customer to have a better than average credit history.

Your biggest obstacle is not the bankruptcy however...The unemployment is. This is going to close the door to a lot of lenders that might otherwise say yes.

Your best bet here is to check with some local credit unions and see if they would be willing to help. It's a bit of a long shot, but worth the try, because their terms will be much better than the alternative.

By the way, carrying the lease through the bankruptcy helped to begin your credit rebuilding process and without the unemployment would probably help to get you approved with a credit union.

In addition, most credit unions will want 2 years after bankruptcy before they will loan and you're getting close enough to where they might make an exception, because you carried the lease through.

More than likely you will need to find a cosigner that can help until you get back on your feet and then you can refinance them off the loan once you're working again.

If you don't have someone willing or able to cosign, then you may need to look to a "Buy Here Pay Here" dealership. They will more than likely want a decent down payment to offset the risk of the unemployment though.

Outside of the buy here pay here dealers like DriveTime or JD Byrider, there are other more traditional lenders that would approve you.

Lenders like Credit Acceptance Corp guarantee credit approval, but they will not lend direct to the consumer and only originate loans through dealerships that they are contracted with.

I wish I could give you some better news, but the unemployment really makes this a bit more challenging than if it was just the bankruptcy to contend with.

Hope this helps,
Justin

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