Is it Better to Buy or Lease a Car After Bankruptcy?

If you want to get approved at the best possible terms when buying a car, it is important to know a car lender's credit guidelines before you apply for credit ... especially if you are bankrupt.

This will save you time and frustration - but more importantly, it will help you avoid credit inquiries can lower your FICO credit scores by 12 points in the query

.

Step 1 in making lease or buy decision is to determine the lender's credit guidelines.

You can begin by asking if you lend people with bankruptcy. If so, on what terms?

This is true. You need to be upfront that you filed bankruptcy. Do not hide. We must face the fact that some dealers just will not work with people who have filed bankruptcy. Therefore, our task is to find those that do not.

Some lenders will only hire people with bankruptcy. Others will offer purchase financing. However, still others only borrow to use a hybrid of two -. This is especially common in Texas

ask the director of finance at the dealership to you directly as the manufacturer prefers the structure.

And here's a quick tip for you:. If your bankruptcy does not appear on the credit report your lender withdraws - then, in the eyes of the lender, you are bankrupt

only the lenders would consider using are:

- First choice: Captive lenders (car manufacturers)

- Second choice: Banks (not finance companies)

- Third choice: Credit Union

Ninety-nine percent of the cars I've leased over the years have been with captive lenders. Just one was leased by the bank.

to the work came from a conversation I had with Amy, Finance Manager at the local Land Rover dealership here in Indianapolis. I told her I was open to her financing recommendations, but I prefer to finance through the car manufacturer.

I told her my current FICO scores. She immediately said that his results she could do better through a local bank. I signed a loan and told her to go for it.

The next day I signed a lease agreement with local banks. Being open to her advice literally saved me hundreds of dollars a month on that car.

So, be flexible ... But be careful. It seems that most car dealers call all their sources of financing banks. When in reality, some banks, some credit unions, and most of the sub-prime finance companies.

Here is a list of some of the most commonly used sub-prime auto finance companies:

1 HSBC Car

2 Capital One

3 AmeriCredit

4 WFS Financial

Do you want to pass on the sub-prime finance companies - unless you have exhausted all other options. Sub-prime lenders should be your last resort.

and use only a credit union if they report to all three national credit reporting agencies. How did you find out if the credit union reports to all three credit reporting agencies?

Simple - ask. Ask the branch manager at the credit union if they report. And after you get a loan, check all three of your credit reports and insure their trade line appears on each one.

three worst luxury captive lenders to lease or buy it from bankruptcy after the

1 BMW

2 Mercedes

3 Porsche

three worst major captive lenders are:

1 Honda

2 Kia / Subaru

3 Toyota

What makes this worse?

After these lenders see that you filed bankruptcy, they are less likely to work with you. However, if you are willing to work with you, they'll want you to be at least several years of discharge and perfect credit during that time.

Now that I've told you how bad the above six lenders are - there are times where they May offer you good deals. For example, if one of the above happens to be the largest retailer in your area, they May be able to offer special deals to smaller dealer can not.

Of course, things change all the time captive auto lenders. They change their credit guidelines on a whim to meet their own financial goals. Therefore, it is always a good idea to at least research these dealerships -. Just do not get your hopes too high

OK, so you've done your research and narrowed down the choice for one or two car manufacturers.

Step 2 in making lease or buy decision is to purchase your FICO credit scores.

It is important that you have their latest results when you talk to car dealers (just like I did with Amy). It puts you in charge.

When you enter a trade with the FICO scores, the salesperson will know that you are more informed consumer and can not be taken advantage of. I only know that the FICO credit scores auto dealers use are a little different than what we see as potrošači.Rezultati dealers review are called FICO Auto Industry Option rezultate.Dobra news ... your FICO scores can be higher than your normal FICO scores if you paid all previous auto loans as agreed.

Some car dealers have told me that if your FICO scores are higher than the results of merchant reviews -. They can even use your results to get a better job

you can buy results from myFICO.com.

Step 3 is the interview the remaining car dealers on a deeper level.

Start asking them these questions:

- Which credit reporting agency is not used to the lending decision

?

- What is your minimum credit score requirement to be approved

- What credit score needed to get the best rates

?

-? Do your lenders prefer offering lease or financing the purchase of bankrupt debtors

- What incentives are there to lease or buy now

?

At this point it is important to remain open to either leasing or purchasing. Assess the opportunities and incentives. Remember, you are purchasing financing. In other words, the most important factor is the willingness of the lender to loan money.

I personally see the lease in relation to the decision to buy in three ways:

1 If you are recently recovering from bankruptcy, the only thing that matters is if you can get approved at the interest rate you can afford the lender that reports to all three national credit reporting agencies. So you should only consider lenders that are bankruptcy friendly.

2 Once your credit scores begin to rise, you can start selecting cars based on which credit reporting agency the lender uses to determine if you qualify. Obviously, you should choose a lender who uses your highest FICO credit score to lending decisions.

3 When the results are high enough ... or two years have passed after the bankruptcy ... or bankruptcy does not appear on the credit report the lender uses, then you can choose almost any car you want. But make sure you still do your research and use of your credit scores to help you compare interest rates, terms and incentives.