A four-wheeler is a necessity in everyone’s life people today. Yet, it is practically very difficult to purchase a car with your own money without a loan. While car loans are readily available today for anyone having a good credit history, this may not be the case with everyone. People who are facing a bad financial situation or those who are very close to bankruptcy may find it difficult to get a car loan. If you have not yet reached full bankruptcy and have signed a debt agreement, the situation could be different. Let’s find more information about car loan after debt agreement.
Different Facts About Debt Agreement That You Should Know
Life without a car can be difficult and you maybe tempted to choose whatever option comes handy to purchase your favorite vehicle, but there are certain things you must know. Here we have listed out a few facts that a debtor must be aware of before opting for a car loan after debt agreement:
What is a Debt Agreement?
A debt agreement is an alternative to full bankruptcy. This agreement is signed between a creditor and a debtor. The usual rule in this case is that you are allowed to pay the principal amount without worrying about the interest and other fees. The debt agreement is usually mentioned in your credit report too.
How is a Debt Agreement Different from Bankruptcy?
Bankruptcy and debt agreement are very different from each other. If you plan to get a car loan during the debt agreement, you need to first understand the difference between the two.
- Bankruptcy can be voluntary or forced, depending on the amount you owe to the creditors
- Debt agreement means the creditors need to accept a decided debt amount, while in bankruptcy, unsecured creditors stop chasing you for payments
Difficulties Faced to Get Car Loan After Debt Agreement
While the doors are still not completely closed, the chances of getting a car loan after debt agreement are reduced significantly. The most common challenges you face are:
- Reputed banks and financial institutions hesitate to lend money to people under a debt agreement
- The lenders may seek higher interest rates for such loans
- You may be asked to give a higher security or collateral for getting a car loan
There are options even for people with bad credit situations. You need to do a bit of research to find the best of them. Look for car dealers and lenders who specialize in bad credit car loans.
Step by Step Procedure to Get Car Loan Sanctioned
Follow the steps to get your car loan after debt agreement:
- Documents required: You need to carry your actual debt agreement as well as proof of your income. You should also carry other documents that reveal your monthly expenses such as utilities and groceries.
- Seek a Licensed Dealer: It is necessary that you look for a licensed dealer only, because the credit report is going to show your loan transactions.
- Budget: Set a budget for the new car that you can afford in your current financial condition. Don’t forget to include car insurance, loan insurance and the amount that will be spent for getting your four-wheeler registered while calculating your budget.
Once you are out of bankruptcy, each financial decision needs to be taken with care. Consider buying an old and used car for your daily travel needs in case it suffices. This will help to cut down on expenses. It is always wise to consult a financial broker during debt agreement and know all the ins and outs of applying for a car loan after debt agreement. Once you know the pros and cons of applying for a car loan during debt agreement, you can make a well informed decision.