Rebuilding Credit After Repossession
Over the last couple of weeks, almost every news channel featured the new cash for clunkers program explaining the details of the program incentive. The hope was the program would stimulate new cars sales and reduce the number of gas guzzlers on the road. Now the headlines are different. Almost as quickly as it came, Congress is having second thoughts and is considering suspension of the program. According to a CBS 11 news update, the new program may already be gone because of funding concerns. The article said: "No one knows for sure how much money is left in the program, because the government website that's handling the program is bogged down with the huge number of submissions it's getting." Around 10,000 cars have been sold under this program in the Dallas Fort-Worth area since the program started last week.
Regardless of the commentary on Congress underfunding another program, there are some additional things to remember from this experience. The first is that this program, just like any other, can lure consumers that weren't looking to originally purchase a vehicle. Many people end up in financial distress because of lack of planning. Jeff Bartlett, deputy online auto editor for ConsumerReports.org, provides sound advice when you are considering a new car purchase.
His suggestions include:
1. "Don't be swayed by all the incentives. Focus on finding the best car for your needs, one that's safe, reliable and has low owner costs. Then look to the incentives, because there are deals to be had from almost every company."
2. "Make sure you shop around for financing and go into the dealership knowing you are pre-qualified for a reasonable loan. They'll be able to tell you right away if the dealer can beat or match that."
If you have already gone through bankruptcy, one of the best ways to rebuild your credit is to make good financial decisions going forward. The Cash for Clunkers program came with lots of promise and bells and whistles. It probably helped many people get a new car that needed one. However, it also had the effect of luring people that weren't planning a purchase into the car lots. When you're looking to rebuild, resist the lure and do your research before you decide to buy. You may end up with an additional monthly expense at a time when you don't need one. Also consider the collateral expenses. If your old car was paid for and you utilized an incentive like the Cash For Clunkers to get better financing, you may still end up in a worse situation because of higher insurance premiums for financed vehicles.
The second major lesson out of the Cash for Clunker experience is know what things are going to cost you, especially when you are rebuilding credit. Whether it's this program or the latest add for digital TV service, understand and know the cost before you sign. Just like the federal government, many consumers jump into new financial obligations without assessing the full cost of the program. Also consider whether you're jumping in because you need the new expense, or whether you've simply been tempting by creative advertising.
Bankruptcy is a valuable tool in your financial recovery especially if you are trying to stop repossession . However, it is just the first step. Don't squander your financial strides with impulse purchases. Instead, continue your efforts by making plans for financial success.