Auto Loans - Should You Buy a New or Used

Car After Bankruptcy?

Getting an auto loan after bankruptcy can help you to get your credit back on the right track.

However, you will want to make sure you choose the auto that's right for you and your current

financial situation. This article answers the common question: Should you buy a new or used car

after bankruptcy?

When shopping for a vehicle, one of the hardest decisions to make is whether to buy a new car or

a used car. This is especially true after filing for bankruptcy. You want to make sure that you

purchase a vehicle that is a worthy investment, but you also want to avoid payments that are so

high they could get you back into financial trouble.

Here are two tips that may help you make the

decision:

Consider the Rates You Will Pay on a New Car

vs. a Used Car After Bankruptcy

Anytime that you take out a loan, you are required

to pay interest on the money you borrow. The

interest rates you pay after filing bankruptcy are

typically higher than average interest rates. This

can sometimes make the total amount that you pay for your car over the life of your auto loan

higher than the car's value. In other words, you run the risk of purchasing a bad investment.

To make sure this doesn't happen, you will need to consider the interest rate you will be paying

in addition to the purchase price of the car. There are many auto loan calculators online that can

do the math for you. Be sure to make comparisons on rates for both new and used cares before

making any decisions.

Make Sure You Can Afford the Payment

Because new cars are so expensive and average a purchase price of over $20,000, payments can

be quite high. Used cars loans, on the other hand, have lower purchase prices and can be much

more affordable on a monthly basis. However, used cars are often devoid of any warranty, so

you run the risk of buying a lemon. No matter what you decide to do, the bottom line is that you

need to make sure that you can afford the monthly auto loan payment. The goal of an auto loan

after bankruptcy is to improve your credit, not make it worse.