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Bankruptcy and Vehicle Financing

mazdaprofourmazdaprofour Posts: 202
edited September 2014 in Mitsubishi
Hello all, I am about to file bankruptcy. Mitsubishi, Kia, toyota and Hyudai have told me that I can get approved as long as I have a 1000 to 2000 dollar downpayment and have a discharge letter. Is this true? They have told me this without looking at my credit. I have been at my job for over 4 years and have a good income. Can this happen or are they wasting my time. I am willing to pay a high interest rate if it will get me into the car.


  • You're about to file BK and screw your creditors out of their money, and THEN you want to go buy a new car?

    Is this some kind of sick joke? If you have the cash to buy a new car, pay it to the people you ALREADY owe instead of discharging your old debts and then going back in the hole again.

    How about a little personal responsibility? Don't file BK, go for credit counseling and get the payment terms stretched out. Filing BK is just taking the coward's way out, except in extreme circumstances. This doesn't sound like one of them.

    And if you don't have a car, but need one, how about getting a $2k car (your downpayment) instead of a new one?
  • mazdaprofourmazdaprofour Posts: 202
    Thanks for your lovely comments....NEXT!
  • hicairahicaira Posts: 276
    Hungry is dead right. Somebody needs to slap you upside the head. People who bag on their debts only drive up the cost of interest - heck the cost of everything - for those of us who manage to pay what we owe and buy what we can afford. If you have $2k to dump on a new car then you also have 2K to either pay your debts like a responsible adult or buy what you can afford, and only what you can afford.

    Get a clue. The harm you are doing to yourself, your credit rating, your family (assuming any will associate with you) and the society as a whole is just not worth the fleeting pleasure of that new car smell in some econobox.

    So, what'll be: you gonna do the right thing or continue to be a loser?

  • Then tell me I'm wrong. I'll assume from your response that I'm dead on. People like you drive up interest rates for people like me.

    You obviously didn't lose your job (you've had it for 4 years), so it seems to me like you just ran up more debt than you could handle and decided to take the easy way out instead of sacking up and paying for it. Sure, it would suck, but you spent the money in the first place.
  • KCRamKCRam Mt. Arlington NJPosts: 3,516
    Hungrywhale and hicaira, there are MUCH more polite ways to express your opinions than your statements above. If you can't keep yourselves reeled in when you reply, then don't bother. Don't do it again - got it?


    Mazdaprofour, I think you may be missing what the dealers have told you. They have told you they require a discharge letter first. This is the letter from the bankruptcy judge that certifies that your bankruptcy is finished, not beginning. If you are just now about to file bankruptcy, then you will not have a discharge letter to work with.

    Smart Shopper and FWI Message Boards
  • Sorry, but I can't stand people who run up thousands in CC debt, buy nice cars or whatever and then file BK because they don't wanna pay. He didn't lose his job (he's had it for 4 years), so why file BK? Sure, it could be due to a number of things, but from his response to me, I gather that it's not due to anything except his own lack of control when it comes to spending...
  • hicairahicaira Posts: 276
    I thought I DID reel it in! I mean, is there a nice way to say "deadbeat"?

  • KCRamKCRam Mt. Arlington NJPosts: 3,516
    From the Member Agreement:

    If you wish to take issue with the statements of other Town Hall members or staff, please engage in healthy, mature debate and not immature behavior or name-calling.

    That's the bottom line, guys.

    Smart Shopper and FWI Message Boards
  • div2div2 Posts: 2,580
    1.mazdaprofour WILL be punished for his lack of responsibility- He'll wind up behind the wheel of a Hyundai or Kia.

    2. Can anyone explain just what was so wrong about the concept of debtors prison?
  • mrdetailermrdetailer Posts: 1,118
    This was due to circumstances of health beyond her control and after health insurance was denied. This was not an easy road for her. Either before or after. This bankruptcy remains on her credit and will for essentially 11 years from the date of discharge.

    The famous beacon score will be shot for a long time. This means that whatever you do there will be consequences, like higher down payments, requirements of security deposits, secured credit cards, much higher interest rates and is most evidenced when buying a house. That can be really difficult, if not impossible without significant equity.

    In order to get her first car loan, I actually had to open a savings account with fixed term CDs for the length of the loan in both of our names and put a significant deposit into it. It's been over 9 years and she still struggles with credit today.

    The legal theory is that since your are discharged of your debts you are now a better credit risk. After her experience I am more inclined to see this advertising as a ploy -- preying upon the weak.

    The only reason I think that dealers are willing to finance these is because of the higher interest rate which equals higher profits. If dealers don't make too much on new cars they can make a bundle on financing. These loans are almost always recourse loans, and are ultimately the dealers responsibility on default. They quite often require a cosigner like I had to do with my relative. And if dishonest the loan will only be made out in the cosigners name. If you miss a payment there will not be much of a grace period before repossession.

    Good luck whatever your choice.
  • cliffy1cliffy1 Posts: 3,581
    OK, this is right up my alley. I'm an F&I guy at a Toyota dealership. Without looking at a customer's credit, I wouldn't say Toyota would finance them, but I do know I could find somebody to pick him up.

    With 4 years on the job, good income, $2000 down and (this is the big one) total flexibility on which car he gets, I could even get Satan financed as long as the BK is discharged and there are no defaults on child support.

    What would such financing look like? Well, that all depends. The best case (for the customer, not me) would be for Toyota to pick them up at 15.25%. If not, I'd send him to a drek bank at 23.99%. Here's the other catch: I can't force this customer to buy an extended warranty, pre-paid maintenance, credit life and disability and GAP, but I can't be forced to process the deal either. If the bank limits our front end (meaning we may have to sell at a loss on the car), I must make it up on the back. If I can't talk them into extra product, we blow the deal.

    How many of you have ever seen a $15,000 car drive out at a $600 per month payment for 5 years? None of you? Well, I can tell you one participant here who is about to see one.
  • mazdaprofourmazdaprofour Posts: 202
    Well thank you all you friendly people. I am glad to see so many people that are willing to help. One calls me names and the other says that I am going to pay 600.00 a month. Thanks guys. First off, I was not born yesterday. I am glad to know that Toyota has such great people working in their F&I department. This would not be the first time that I have dealt with the lets take this off and add that on game while in the F&I room. Since I did not get any help on this board, which is sad cause this was a good place a long long time ago. I took a trip down to 5+ dealerships in my area. Can I get a car....YES you know why? cause so many people are without cash now days. A slow down in the economy has even forced the honda guys to have to compete to stay in business. Most people have nothing to put down. Do you think that with 2-3 thousand down, I am going to be told see ya or be allowed to walk. Heck no. The dealerships are not as busy as 2 years ago and competition is big. Have you guys heard of 0% financing? I know that this is not realistic in my situation but I am trying to make a point.

    I have seen people get cars with decent payments even after bankruptcy. Ford even has a plan that is made for people that are buying after filing.

    "Without looking at a customer's credit, I wouldn't say Toyota would finance them, but I do know I could find somebody to pick him up."
    Well you just did sir. I have owned many cars and have always been on time.

    As for the financing guys....I make it clear at the start that I am aware of the process and do not waste my time. I am not mean about it but hey, I have too feet and I have walked in the past. A fool will come in and play the "up to how much game".

    Will I buy a car and pay 20% interset...yes to rebuild credit. Will I pay 600.00 a month heck no!

    A Kia spectra can be had for 13K out the door

    even at 20% interest and 2 to 3 k down, we are talking under 300.00 a month. That is in comparison to 430.00 a month.

    I will let you all know what happens at the end even if you do not care. It hurts get treated so badly for posting a question. But no big deal. Thanks any ways.
  • cliffy1cliffy1 Posts: 3,581
    You asked for an honest answer and that is exactly what I gave you. Let me give you a "for instance" here. Lets say you wanted to buy a Corolla that costs $16500 at MSRP. Now, there is not a huge mark up on Corollas and very high demand right now. The bank says they will only finance you at 80% of invoice. OK, invoice is roughly $15000 which means you can finance no more than $12000 and you've got $3000 down. That means we actually must sell the car for $14000 (don't forget tax and tags) to get to $12000 financed.

    Is a dealership going to sell a high demand car for $1000 back of invoice? Sure, but only if they are making it all up and then some on the back. Some banks will cap us on the price of the car, but then allow us to add as much financial product as we can. So, if you agree to the warranty, GAP, LA&H and a maintenance package and are willing to pay 20% interest, you just started the credit re building process.

    By the time all the financial products are added, you are no longer financing $12000, but closer to $17000 and payments are in the $450 range.

    If you are willing to accept this as penance for your sins, jump right in.
  • cliffy1cliffy1 Posts: 3,581
    OK, so maybe $600 a month was a stretch. Not much, but a stretch. Change that from an 80% call back to an invoice call back and you're just about there.
  • mazdaprofourmazdaprofour Posts: 202
    Can I get you to please step out of the toyota world for a second.

    First of all I know that the new corolla is in demand so that is what can get you to get away with that. I know this so why do you think that I am not dealing with a high demand car at a over priced dealership.

    We bought my wives toyota celica back in 2000 and yes we paid sticker. She wanted that car and she wanted it right away. At that time and somewhat now, the celica GT was hot and selling real quick. The dealerships would almost sell one car to like three people by mistake.

    But the KIA, mitsubishi and Hyundai are not in the same boat. Yes they do have a few cars like the kia sedona that sell well but hey what about the accents and rios of the world. 20 to 30 sitting on a lot is never a good thing.

    Even the echo is not a hot demand car. Infact it may be almost on its way out the door.

    So please lets talk reality. The dealerships and cars that i am dealing with are not in the same game as you. A company like hyundai knows that they are trying to make a name so what they get they will take. If I am placing 20% - 30% of the car down and the car is under 13k. It can happen.

    Toyota has always been hard to deal with and hrad to finance. We moved my cars car loan to my credit union as soon as we could. Toyota dealerships have always had over priced cars, parts and services.
    You are buying the name.

    I can get a Kia or hyundai for much less, get more of a car, pay less on insurance, longer warrnty and will not have to deal with the vulture mentality (no harm intended).

    I have had friends like myself that have owned the toyota and honda cars and have made the move towards the other options.

    Just check out NHTSA website. The kias and hyundai's of the world are not doing so bad.
  • cliffy1cliffy1 Posts: 3,581
    I was unaware that this was going to become a comparison topic between Toyota and Kia (and BTW, I worked at a Kia dealership once and know there is not a comparison to be made). I thought this topic was about the realities of what happens to you when you rip off your previous creditors and want to borrow money again. My mistake.
  • mazdaprofourmazdaprofour Posts: 202
    It is not a comparison but I was trying to make a point. Just like driving out of town can get you a better deal (most of the time) on a car, driving to another dealership (manufacturer) can do the same. I was trying to show you that the toyota way is not always the way it is. You do have small and over stocked dealers that do actually have to sell a car and not a name. What you consider a "cheating, bankrupt and cheap" customer, someone else may see as a person that has had either bad things happen to them or has made mistakes that they are trying to correct. You never know. One day you may be buying a car after going bankrupt and may run into a finance man that is trying to stick you with a 600.00 dollar a month payment. And I am sure that for every one customer that has ripped of the dealer or bank, the bank and dealers have ripped off 100 of them.

    I know that the worst people IMHO work in the finance room. They are the ones that wear the ties and drive the nice cars. You know how they do it? by ripping people off just like you said I am ripping them off. They try to tell you the cars are great but want to sell you a enhanced warrnty. They try to sell you under coating, over coating, gap protection, lojack, highjack and anything else that you can think of.

    Hey how many people do you think the dealerships have RIPPED OFF by selling them 75.00
    pin-striping or 80.00 floor matts?

    So who is really ripping who off?

    so once again please step out of the TOYOTA world and join me in the real world. Where some dealerships do not sell 80 cars a day. And may need to cust prices to make a deal.
  • cliffy1cliffy1 Posts: 3,581
    Right. Do you know why you will be asked to pay 20% interest? Because most "second chance" customers default on their loans. It is very rare that a person actually takes their second chance and doesn't screw the banks again. I commend those who use the new beginning to make a fresh start. It does happen but that is the exception rather than the rule.

    Good day sir.
  • mazdaprofourmazdaprofour Posts: 202
    Thanks.. I know the reason for the high interest rate sir but I wanted to show you that I will not be paying 600.00 a month. As long as I drive right past that little red toyota sign.
  • oldharryoldharry Posts: 413
    If you have fallen on hard times, but still have a job, why are you planning to buy a new car? Lower or non-existing payments on a used car, or continue to drive the old one allows you more financial leeway to rebuild faster.

    Have you tried one (or more) of those services that claim to negotiate with your creditors to reduce your debt and arrange a pay back schedule without bankruptcy?

    You will have more disposable income, and a better standard of living for the next five years if you can avoid bankruptcy. BK should only be a last resort, for your sake, not for your creditors.

  • mazdaprofourmazdaprofour Posts: 202
    After doing all the math, It will take me 5-7 years to pay back all that I owe. Not to mention that at that time, I will not have any money saved up. We live in a very unstable economey and I know that things look like they are only going to get worst. With the price of oil on the riss, gihting in the middle east, unstable job market, lack of stock and 401k security, we are living in bad times. The bankruptcy laws are also about to change. My company has already laid off 1000 people. With more layoffs to come.

    I know my financial situation and I am way too much in debt. I have a 20,000 dollar car loan on a car that is worth 11,000. I also have a 14,000 credit card debt.

    Now to some that is not a lot, but to me it hurts when I have nothing left each month after paying the bills. Call me lazy, call me a jerk, a cheat or whatever. But I am not going to sit back and risk getting sued after the job market sees more layoffs and the bankruptcy laws have changed.

    I am going to protect myself. It will take me a few years to build back my credit but hey it would also take me a lot longer to pay back what I cant. Please no more "you charged it you pay it". The credit card companies have been targeting people that they know can not pay the back just so they can charge them higher interest rates and late fees. Get them while in school and they are in debt for life.

    Did you know that most credit card companies will give you a card if you make 18,000 or more a year. Who can live on 18,000 a year? You can not even make rent for that.

    My original post was not about morals. I did not ask "am I doing the right thing". I asked about financing and that is what I need help with.

    I would also consider a used car but lets see.. if I can get a new car for around 10-11k, why buy used and risk it.
  • cliffy1cliffy1 Posts: 3,581
    You currently have a $20K car note? For god's sake, don't take that down in the BK! If your credit was in decent shape when you took out that loan, you are probably paying around $400 per month and are paying something less than 8%. If you take them down, you will be in a $12K car and be paying 20% interest at about the same payment or higher.

    The other thing is, your credit will take much longer to reestablish with a car loan on a BK. Depending on how the finance company reports it, it could show up as a repossession. With a repo, it gets exponentially harder to ever get a car loan.

    I know you've blasted me before, but this latest tid bit of information changes the advise. Keep making the car payments. Talk to the bank and let them know what is happening and that you intend to keep the car and the payments. You have no idea how much better things will be a few years from now if you do this.
  • mazdaprofourmazdaprofour Posts: 202
    "If you take them down, you will be in a $12K car and be paying 20% interest at about the same payment or higher".

    Cliffy, how are you getting these numbers?

    Here is ho the financing will work.

    12,000 car
    2,000 down payment
    10,000 financed at 23%= $281.91 a month.
    That is a lot better than 430.00 a month.
  • isellhondasisellhondas Issaquah WashingtonPosts: 20,225
    mazda...would you listen to cliffy? You are about to make a horrible mistake.

    I seriously doubt if any bank will make that 23% loan in the first place but I could be wrong.

    Forget the moral aspect of this (which to me is VERY important) but consider the long lasting ramifications of taking this drastic step.

    Did your BK lawyer go over any of this with you?

    Have you considered repayment programs?

    Take your 2000.00 and buy a decent beater!
  • wishnhigh1wishnhigh1 Posts: 363
    when people ask for information and advice but never accept what you give them?
  • mazdaprofourmazdaprofour Posts: 202
    "I seriously doubt if any bank will make that 23% loan in the first place but I could be wrong".

    Are you saying that no bank will finance me and charge me a 23% interest rate? If so, you are mistaken. People buy cars every day after a bankruptcy.

    "but consider the long lasting ramifications of taking this drastic step"

    I do not fear the ramifications of this due to the fact that a bankruptcy can be fixed over time. 1-5 years depending on your income and how you re-establish credit. I have known a lot of people that have done this and are doing fine. Lets see 5-8 years of killing myself to pay back or 1-5 years of repairing my credit. I would be risking a lot by not getting rid of the car and credit cards. If I follow some of the advice here, and I loose my job, and the bankruptcy laws change, I will be a lot worst off.
  • KCRamKCRam Mt. Arlington NJPosts: 3,516
    mazda, with all due respect, if you think your slate will be magically wiped clean in 1 year by filing bankruptcy, you have been seriously misled.

    Filing bankruptcy labels you as a maximum credit risk. The judge will go through your assets when you file and will require you to sell or liquidate some of them - this can include the car you already own. Regardless of your income, your credit will not be re-established in any short order. In fact, if you are making that much income, your creditors may demand more of what you owe from the judge - this will keep you in the hole that much longer.

    The one question that still remains unanswered from your opening post is, since you say you have yet to actually file BK, are you trying to buy this car now, or after your BK is discharged (which could be 5 years away), at which point this conversation is meaningless.

    Smart Shopper and FWI Message Boards
  • isellhondasisellhondas Issaquah WashingtonPosts: 20,225
    Forgive me. When I owned my own business I was "taken down" by two customers who charged themselves into bankruptacy.

    Trying to pull my punch here...but...doesn't it bother you just a little bit that you are skipping out on your obligations by taking the easy way out? Just curious...

    Maybe I'm just old fashioned or something...

    And, listen to our host. His last post is DEAD ON!
  • mazdaprofourmazdaprofour Posts: 202
    Hello guys, the only car that I own is a car that is a 1993 Mercury Sable. It has a kelly blue book of under 2,000. In a very rare situation will a judge request you to sell something unless it will cover a subsatntial amount of your debt. And in the case of the car, this is not a luxury good. It is a car that I will be using to go back and forth to work. I have spoken with many lawyers and have talked to a lot of people that have gone through the process. I would suggest that more people research this subject cause I have. Life is not over folks after a bankruptcy. You can live a normal life but you will pay more for a car or a house.

    Credit card companies will start sending offers right after the discahrge. I am even geting card offers now even though I am 90+ days late.

    Cliffy has yet to show me how I can not get another car and get a lower payment. Do you guys understand that I am paying 430.00 a month on a mazda protege? I have alredy shown him how the numbers can and will work.

    I will be filing this friday and should have a court date soon. Do I feel guilty, yes for some bad financial choices I made. Am I going to let the credit companies eat my salary up? Heck NO!

    I will let you guys know what kind of car I will buy and what my payment will be. The moral stand point really is a non issue for me. You know why?cause we live in a dog eats dog world.

    Do you think that when discover card was charging me 20+ interest rate and they would not even budge, even though I had a account with them for 5 plus years, they where using morals.They think about the pocket and I am going to think about my pocket.They would not help me out at all.

    So the MORAL of the story is...MORALS will get you so far, the LAWYERS will do the rest.
  • isellhondasisellhondas Issaquah WashingtonPosts: 20,225
    For the forum...I will refrain from commenting on the above post....
This discussion has been closed.