Are you thinking for filing a bankruptcy? What happens to your car?

No one likes to think they might have to declare personal bankruptcy, but if it happens to you, there are things you should know about keeping or acquiring a car.

Thinking for Filing a Bankruptcy?

Keeping a car

If you own your car outright, you can keep it if its fair market value is $5,650 or less. If it’s worth more than that, the bankruptcy trustee is required to sell off the vehicle. The Ontario Executions Act permits a bankrupt to keep one personal-use vehicle as long as its value is under $5,650.

If you bought your vehicle with a loan or on a lease, you have two options when you file for bankruptcy (or for a proposal). 1. You can keep the car, and continue making your loan payments on it; 2. You can give up the car, and anything that is owed to the lender after the car is sold will be included in the proposal or bankruptcy.

Acquiring a car

What about getting a car loan after you’ve filed for bankruptcy? This is by no means a slam-dunk, but it can be done. To find a car loan while in bankruptcy, you can try your bank. It might offer you a loan on condition that you agree to the direct deposit of your pay cheques. There are also Ontario auto loan companies that do financing for bad-credit consumers.

Here are some tips on how to get the financing you need:

● Have a look at your credit profile, and see how you can make it more positive. You have the right to correct any misinformation or to add a note explaining your circumstances.

● A car loan company may give you approval, but you can expect the interest rate on a bad-credit loan to be higher than the best-customer rate, since consumers in bankruptcy are regarded as high-risk borrowers. In these circumstances, be sure to calculate how much of a monthly payment you can afford. When approaching the car loan company, have a monthly payment range clearly in mind. And be realistic about what you can afford!

● Shop around. Make sure your lender is reporting to the credit bureaus regularly. You will be repairing your credit and elevating your credit score. Also, make sure your monthly payments are fixed, not variable. Payday loan outlets are not reliable in this regard.

● You may have to make a down payment, and no matter how much your take-home pay is, you will likely only be approved for a loan under $15,000. If you’re eyeing a car that’s pricier than that, you’ll need to make a bigger down payment.

● Once you’ve been approved for a bankruptcy car loan, consider eventual refinancing. By making all your payments on time, you could qualify for lower interest rates even after a year.

For information about PRUDENT VALUE CARS, visit our web site: www.prudentvaluecars.com 

How Financing Your Car Can Help Your Credit Score

When it comes to purchasing a car, most people don’t want to buy a car they can’t afford. They want to try and get the best interest rate and be able to calculate their monthly payments. If you've had bruised, bad credit, no credit or no previous history with car loans, an auto loan (and personal loans) will be tougher to get but they can also help you build your credit.

Consumers should do their homework on how financing is determined. Auto financing depends on a number of factors and understanding each will get you a better deal. The rates are affected by the applicant’s age, down payment, type of vehicle, length of the contract and their credit score. If you do not have any credit history, you may need a co-signer. This will allow you to obtain the car you want, the loan you need and help build your credit. Keep in mind that not making your monthly payments will not only destroy your credit but also the credit of your co-signer.

Borrow with your car- Vehicle title loans

The prime benefits to your credit score doesn't come from paying off the loan itself but from the payment history of the loan and the management of debt that your credit report will show. Paying off a loan does a great service to your future borrowing power. Every time you make a payment on a debt that is not over 30 days late, you will receive a positive note for that payment of your credit report. Paying off your loan is a great accomplishment and of course will not hurt your credit but the monthly payments itself boost your credit report as it accounts for 35% of your score.

Credit history counts for 15% of your overall credit score so you will be able to benefit from your loan simply because of the age of your account. The older the account gets, the more it helps build a positive past credit history.

A vehicle is a big commitment but a strong financial stepping stone. Maintaining the vehicle and making timely payments will save you money in both the short and long runs by reducing the costs and repairs and building a strong credit history.

The economic downturn has negatively impacted auto sales but a consumer can benefit from this because dealers are offering incentives and great leasing options such as no interest financing in order to get a sale. Visit Prudent Value Cars inventory at http://www.prudentvaluecars.com to find the right car for you and the financing you need!