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

What do you want of Home Loans After Bankruptcy ?.

It will save you time and frustration--but more importantly, it will help you avoid prestige inquiries that may lower your Fico prestige scores up to 12 points per inquiry.

Home Loans After Bankruptcy

Step 1 in manufacture a lease or buy decision is to settle a lender's prestige guidelines.

You start by request if they lend to population with a bankruptcy. If so, on what terms?

That's right. You have to be upfront that you've filed bankruptcy. Don't hide it. We have to face the fact that some dealers just won't work with population who've filed bankruptcy. So our job is to find the ones that do.

Some lenders will only lease to population with a bankruptcy. Others will only offer purchase financing. Yet still others will only lend using a hybrid of the two--this is especially base in Texas.

Ask the finance director at the dealership to direct you as to what structure the builder prefers.

And here's a quick tip for you: if your bankruptcy doesn't appear on the prestige article your lender pulls--then, in the eyes of the lender, you're not bankrupt.

The only lenders I would reconsider using are:

- First choice: Captive lenders (car manufacturers)

- Second choice: Banks (not finance companies)

- Third choice: prestige unions

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

That singular deal came from a conversation I had with Amy, the finance boss at the local Land Rover dealership here in Indianapolis. I told her I was open to her financing recommendations, but I adored financing through the car manufacturer.

I told her my current Fico scores. She immediately said that with my scores she could do great through a local bank. I signed a prestige application and told her to go for it.

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

So be flexible...but be careful. It seems most car dealers call all of their funding sources banks. When in reality some are banks, some are prestige unions, and most are sub-prime finance companies.

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

1. Hsbc Automotive

2. Capital One

3. AmeriCredit

4. Wfs Financial

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 only use prestige unions if they article to all three national prestige reporting agencies. How do you find out if a prestige union reports to all three prestige reporting agencies?

Simple--you ask. Ask the subject boss at the prestige union if they report. And after you get the loan, check all three of your prestige reports and make sure their trade line appears on each one.

The three worst luxury captive lenders to lease or purchase from after bankruptcy are:

1. Bmw

2. Mercedes

3. Porsche

The three worst mainstream captive lenders are:

1. Honda

2. Kia/Subaru

3. Toyota

What makes these the worst?

Once these lenders see that you've filed bankruptcy, they are less likely to work with you. However, if they are willing to work with you, they'll want you to be at least several years from extraction and have excellent prestige while that time.

Now that I 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 biggest dealer in your area, they may be able to offer you extra deals that a smaller dealer can't.

Of course, things convert all the time with captive auto lenders. They convert their prestige guidelines on a whim to meet their own financial goals. So, it's always a good idea to at least research these dealerships--just don't get your hopes up too high.

Ok, so you've done your research and narrowed down your choice to one or two car manufacturers.

Step 2 in manufacture a lease or buy decision is to purchase your Fico prestige scores.

It's foremost you have your most recent scores when you talk to car dealers (just like I did with Amy). It puts you in charge.

When you enter a dealership with your Fico scores, the dealer will know you're a more informed buyer and cannot be taken advantage of. Just know that the Fico prestige scores auto dealers use are a slight different than what we see as consumers. The scores the dealers retell are called Fico Auto industry choice Scores. The good news...these Fico scores may be higher than your general 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 scores the dealer reviews--they may even use your scores to get a great deal.

You can buy your scores from myFico.com.

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

Start by request them these questions:

- Which prestige reporting branch do you use to make a lending decision?

- What is your minimum prestige score requirement to get approved?

- What prestige score is needed to get the best interest rate?

- Do your lenders prefer offering lease or purchase financing to a bankrupt debtor?

- What incentives are there to lease or purchase right now?

At this point it's foremost to remain open to either leasing or purchasing. Rate your options and incentives. Remember, you're buying the financing. In other words, the most foremost factor is the willingness of the lender to loan you money.

I personally view the lease versus buy decision in three ways:

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

2. Once your prestige scores begin to increase, you can start selecting cars based on which prestige reporting branch the lender uses to settle if you qualify. Obviously, you should select the lender who uses your highest Fico prestige score to make a lending decision.

3. When your scores are high enough...or two years have passed after your bankruptcy...or your bankruptcy doesn't appear on the prestige article the lender uses, then you can select roughly any car you like. But make sure you still do your research and use your prestige scores to help you collate interest rates, terms and incentives.