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Auto loan interest rate after chapter 13 credit scores are 688 to 722
Hey All,

I know this is a loaded question but I hope with the info I have provided "those in the know" can make a little better "estimated guess" as to what I am looking at for an interest rate so I have an idea of what I am up against.

My wife and I finished our Chapter 13 in June of this year. Reason for BK was due to a rental property, credit card debt, and an RV. The rental was our primary residence but I was transferred and couldn't sell it due to housing crash so we turned it into a rental and bought a house at our new duty station. Lots of factors went into why we chose to file, the main reason being the Veterans Administration took 5 years to complete my disability case after my discharge ( no complaining, it is what it is with them). After my discharge I was unable to work (broke my back while in the Infantry) and we were down to one income so it was the best way out for us.

While in the Chapter 13 we made our house payment and Car payments on time with zero late payments. We made our final scheduled car payment the day after our discharge was recorded in June.

We need to downsize from our current vehicle (2008 F250 Diesel Super Duty) which we no longer need due to not having an RV (camper) that we surrendered in the BK. Repairs on the truck get into the realm of stupidity and it has over 150K miles on it. I have spent $6000 in repairs in the past 2 months and our mechanic said due to multiple factors (He is a personal friend and I trust his judgment) it was time to cut our losses. So a new vehicle is needed. We have picked out the car we want and it will be ready for pick up from the dealership in 2 weeks. I made a refundable deposit to secure the vehicle. They said they could finance me at a "decent" rate with a BK as long as our credit report showed we made our car and house payments on time. Which the credit reports show.

The truck was financed from a local credit union and I have a letter from them telling me they will give me a .50% discount on a new vehicle auto loan. Their rates state on their website that for a 72 month loan I would be looking at a 2.99% (with the discount). But they will not talk to me for a week because we refinanced our home loan last week and it has not been recorded yet so they (and I) don't want to screw up my refi. I am wondering what interest rate to expect. Here is some more info to help with your answers.

Our previous car loan was for 6 years and we paid if off without a single late payment. We made the payment ourselves not through the trustee. Our credit report shows we made all payments on time and paid the truck off a year early.

We made all of our mortgage payments on time and yesterday we were able to sign our refinance paperwork for our home loan (VA refinance) at a 3.25% rate. Which is better than the 4.25% we had but could not change while in BK.

Credit scores for us are:
Wife: TU 701, Experian: 722
Me: TU 685, Experian 701
We each have a derogatory for the BK and I have an extra for the RV turn in.

We have one credit card with a zero balance that was used periodically (with approval from the trustee) but always paid in full so it has not had a balance for 5 years but shows we have used it and paid if off.

Debt to income ratio is very good. We have a $2000 house payment and a combined income after taxes of $8000 a month. No other debts. We have budgeted up to $600 a month for a payment. I hope that I don't pay that much because what ever savings I can make to my overall payment I will add to the payment. (ie. if payment is $475 a month I will pay an extra $125 each month to expedite payoff of loan).

Dealer has done appraisal on our truck and they will give us $13,500 for trade. KBB blue book is only $11,500 but they want the truck because in my area it is an easy sale for them. I tried the private party sales route but I cant do as well because I cant let some one finance it from me. It has had a for sale sign in the window for 2 months now. We have a 30 day lock on that trade in value in writing from the dealer.

I have another $5000 cash to put down for a total of $18500 for a down payment.

New car cost is $44k with a lifetime warranty (I am buying warranty for cash, I am not financing the warranty)

I live in a no sales tax state so there are not any hidden fees. I also have disabled veteran plates that are lifetime plates with no yearly registration fees so no make ups to hide there. Just DMV registration fees.

So I will need to finance around $25,500'ish. I can kick in another $500 to get that down to $25k if need be.

So just in case my credit union will not give me a loan because of the BK I am wondering if anyone has an idea of:

1. What "Tier" we would fit into for financing from a dealer?

2. Is there anything I can say or should know before sitting in the "box" with the finance personnel?

3. Am I considered a "sub prime" borrower?

For those that care (so don't hate) we paid back all our debt (credit cards and RV) in the plan when it was re-adjusted for the new income level because my pension was approved. Except for the house, and the bank didn't lose a dime on it due to the bank bailout funds.

So our income increased considerably but obviously our credit scores dropped 70 points (average) from where they were before the BK. Which is fair.. we got bit and it is what it is.

Thanks in advance for those that can answer.

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You should really go to the dealer to see if the vehicle qualifies for and if they have a 0% interest and if you credit qualifies for it.   For having a BK, your scores are relatively good.   Your CU is already providing you with good rates considering the BK.   Anything here would just be an uneducated guess.  

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Thank you for the input.

I dont think the Jeep qualifies for a 0% rate at this time. I looked at the Jeep incentives going on right now and the model I am buying doesnt have any incentives right now.

I plan on hitting our local CU's before I goto the dealer. LIke I said in my post.. Its a loaded question that probably doest have a solid answer. Again, thanks for taking the time to post a response.

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one more thing..

The Vehicle is a Jeep and it is at a Chrysler Jeep Dealer. Just wanted to add that in case some one works at a Chrysler dealership and has knowledge of who they use and what tier our scores will put us into.

Thanks again

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5 People Helped

Got finanaced

Just an update... got financed by a local credit union. Rate was 3.45% for 84 months. Plan on paying it off in 24 to 30 months. So after discharge in June 2016 we have now purchased a new home and a new car without paying insane interest rates and are rebuilding our credit. House is a 3.25% rate and car is a 3.45% rate.

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