How quickly can I finance a car after my bankruptcy is discharged?

Friday, July 17th, 2009 at 01:49

Winter asked:

We are filing a Chapter 7 bankruptcy, and it is due to be discharged by May. How long after that can we finance a car for a decent rate?

Reply:

"a decent rate"? Good luck.

Here's how you get out of your mess, buying prescription drugs and into a better car.

STEP 1: You're broke right now; buy a broke person's car for right now.

I just did a search on Yahoo Autos, for:
1) Cars within 50 miles of Los Angeles
2) Asking price between $1 and $2,000
3) Mileage of more than 10,000

I found 142 cars listed.
After sorting by mileage, the one in the middle is a 1997 Dodge Neon with 140,000 miles asking $1,000.

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STEP 2: Take the $400/mo you were planning on paying for car payments, and put it in the bank instead.

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STEP 3: March 2009: After 12 months, you'll have $4800 in the bank.
Trade in your $1,000 beater for a $5,500 car.
Another Yahoo search:
1) 50 miles of LA
2) 10,000+ miles
3) Price between $5,000 and $6,000

This time, there's over 1,100 cars listed.
Sort by mileage, the three near the middle are:
2001 Nissan Altima, 1994 Toyota Camry, 1994 Mercedes E-class, with 99,300 miles.

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STEP 4: Continue saving $400/mo for another 12 months. You'd've committed to giving that money to the car dealer, so you should be able to afford this, right?

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STEP 5: It's March 2010. Now, the car you bought for $6,000 is worth about $5,000, and you have another $4,800 cash. For $9,000-$10,000, we're looking at a 2004 Toyota Corolla, or a 2000 Mercedes C-class with about 74,000 miles.

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STEP 6: March 2011 (three years from now): Continue making that same $400/mo car payment that you were planning to make, but now, you have $4,800 cash, and a trade in worth about $8,500. Now, for $12,000-$13,000, you're looking at some three year old cars.

YOU NOW HAVE THE SAME 2008 CAR YOU WOULD HAVE BOUGHT TODAY.
BUT YOU AVOIDED TWO FULL YEARS OF CAR PAYMENTS.
AND NEVER HAD TO OWE ANYONE A DIME
OR EVER RISKED GETTING THE CAR REPOED, BECAUSE YOU PAID CASH EACH TIME.

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STEP 7: Now for the crazy part:
Finish the last two years of car payments, but this time, put the money into a mutual fund.

Let it sit for 20 years, and watch two years of $400/mo (that you would have given to the car dealer as the 4th and 5th years of payments) turn into over $50,000.
That's a free car.

Finance your car here onsite if you need help buying one of these beauties :)