What You Need to Consider Before Buying a Car
You've been out of bankruptcy for a few years and now you need a new car - or at least you believe you need one. Should you make repairs to your old car and try to keep it alive a few years longer, should you buy another used vehicle or should you "bite the bullet" and put a down payment on a brand new car? There's no doubt that after discharging your debts in bankruptcy there will be a slew of car dealerships and financers looking for your business; but what are the benefits and drawbacks of buying a new or even a used car after bankruptcy?
Here are a few things you should consider:
Will you really get a good deal on the interest rate and financing terms?
Taking out a car loan that has credit card interest rates won't be a good deal for your post-bankruptcy finances. But if you can get a good deal on interest rates, a car loan could do a lot to improve your credit rating the long-term.
What is the true cost of owning the vehicle?
Deciding whether or not you should buy a car after bankruptcy isn't just about interest rates. You also need to know if your budget can really fit in such a huge purchase. When calculating the costs of the vehicle include insurance, taxes, repairs, maintenance and gasoline costs in your budget. The last thing you want is to end up defaulting on your car loan or other loans after bankruptcy because you didn't properly calculate how much car ownership truly costs. Remember, the average car costs its owner $7,300 a year.
Finally, ask yourself, do you really need that new car?
One important aspect to thriving after bankruptcy is resisting the temptation to take on debt and expenses you really don't need. If you're current vehicle runs just fine or if you have access to reliable public transportation, do you really need to go into debt to buy a new car?