Chapter 13 Auto Loans?

by Patti

Question: My husband and I have filed chapter 13 bankruptcy due to the loss of my employment 1 1/2 years ago. We are keeping the payments on our home and our lease vehicle.

My question is, our lease is up in 12 months and we will need a new car, but our BK will not be discharged by then.

Are we going to be able to purchase a car while in chapter 13, as we will not have a car at all? Are there Chapter 13 auto loans?

My husband still makes good money and I have since taken early retirement...please help!

Answer: Hi Patti,

Most lenders that offer Chapter 13 Auto Loans will require that you have been in Chapter 13 for at least 2 years (it can still be open).

If I'm reading your email correctly, it sounds like by the time your lease is up you should be fine here. You will also need a letter from Trustee authorizing the purchase.

Even with less than two years, there are lenders that will approve you, but their terms would be a bit tougher...Shorter terms, higher rates, possibly more down, etc.

Please don't misunderstand what I mean however and assume that with over 2 years you will automatically get an excellent low rate approval.

There are many factors that come into play here and the #1 is that you are currently in bankruptcy, so you'll have to be flexible with what you expect for an approval.

A car dealership is going to need to help arrange your auto loan as I don't know of any lenders that will lend direct to the customer while in a Chapter 13.

Start saving some money as you will probably need to put some money down. I'd say $1000 at a minimum, but the more the better, like 20% and up!

To find dealerships in your local area that specialize in bad credit auto loans simply fill out this simple application to get an Easy, Secure and Confidential Auto Loan Quote and a loan specialist should contact you shortly to discuss the terms of your auto loan.

Hope this helps,

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