Bankruptcy and My Leased Car

by Donna G.
(Lockport, NY)

Question: I had a bankruptcy in 2007 it was discharged then. I kept my leased car and have made all payments on time.

My credit score is 655 on identity guard I subscribe to. Should I be going through one of the bad credit auto loans company's for buying my leased car?

One last question, would I be better off turning in my lease and getting a different car? I hear its better to just turn it in.


Answer: Hi Donna,

No I wouldn't think so. This is not to say that you'll qualify at a lot of the Prime banks, but it sounds like you may make a great fit with a credit union.

Most credit union auto loans require two years after a bankruptcy and the fact that you carried your leased car through will certainly help.

Give them a call to explain your situation prior to them pulling credit, because if they do not have a program that will work you won't want to rack up a bunch of unnecessary credit inquiries. Use this Credit Union Locator to find one or more near you.

You can also try Money Aisle. They work with a lot of credit unions throughout the country and they all compete for your business.

Not knowing all that I would need to, I'd guess you could find a credit union to approve your loan in the 9-12% range. This is much better than the "bad credit" lenders that might be in the 18-24% range.

With regards to your last question, that's really a personal preference... If you like the car and you have not had any major mechanical issues, then it may be worth keeping.

A lot of this will also depend on what the payoff would be and if you'd have a bunch of negative equity to roll into your new auto loan.

Just know that if you buy another one you will most certainly have to deal with the negative equity issue, whereas you may have none or quite a bit less with your current vehicle.

Hope this helps,

Justin