Should the Dealer Arrange My Financing After BK

by Carlos
(Sylmar, CA)

Question: I filed Chapter 7 bankruptcy and it was discharged last month. I have applied for and was approved for a unsecured $300 limit credit card. I am looking to buy a commuter car below $15,000 to save on gas and rebuild my credit. I checked my credit score and it is Experian 645, Equifax 654, Transunion 645.

My questions are I went to see a car at my local dealer Rydell Chevrolet and want to proceed to purchase. Should I have them attempt to finance? Or try to get a loan prior with another lender like on your site? What are the chances of getting approved?

Should I just go out to Drivetime and get a car there? I don't want a lot of inquiries on my credit and want to get the best possible terms. I did carry over my home loan and had great credit prior to bankruptcy, over 20 years of perfect credit, FICO Scores above 780 in the past.

Answer: Hi Carlos. I can tell that you must have had very good credit in the past, because your score stayed fairly strong after a very recent BK. By the way, buying a car after bankruptcy is an excellent way to rebuild your credit.

More than likely you will need to work with a dealer to arrange your financing as there are not many lenders out there that will loan direct to the consumer immediately after a BK.

DriveTime Auto Sales is certainly an option for you, but may not necessarily be the best, because their rates may be a bit steep and you may be able to get a better rate with a traditional lender, because of your past good credit.

Try working with a dealer first and don't worry too much about inquiries as they won't affect your score as long as they are within 14 days of each other.

The first inquiry will affect your score a little, but the others will be recognized as you "shopping" for an auto loan and according to the credit bureaus will not have an impact.

In addition, they will fall off in 2 years which is typically the time you will need after a bankruptcy before the more prime lenders will consider giving you a loan.

If you are still concerned about inquiries, write on the credit application (and keep a copy) "No More Than 3 Lenders" near the bottom.

You will probably have to redo the application once you are approved, but this will give you some proof (that you didn't want your application submitted everywhere) if they "shotgun" your application to a bunch of lenders.

Hope this helps,

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