Leasing After A Bankruptcy; Obtaining A Bankruptcy Auto Loan Does Not Have To Be As Difficult As The

I've always chuckled at the reactions I receive when people ask about bankruptcy auto loans, and I advise they be open to leasing.
The looks I get are a cross betewen ¡°are you kidding?

¡± Leasing has undergone a change in popularity for its inception.

In the beginning, everyone purchased cars outright¡­they colud do that because a) buying a vehicle on time was not an option, b) because cars cost much less then than they do now. As options were added to cars, such as color, 2-doors or 4-doors, 5-speed or automatic, am radio or 8-track (oh, am I dating myself here?

), vehicle prices begin increasing. Auto loans terms came out at 12 months¡­moving up quickly to 24 months¡­36 months¡­and soon it became apparent that cars were costing more than people could afford. In stepped the leasing option. It was a neat program at first. You would go in, negotiate a pyament with the auto dealer calculating the suggested residual value at the end of the lease. You were soon the proud retner of that vehicle. The popularity of that method spread like wildfire¡­.Until it became snuffed out when the first lessees drove back in years later to drop off their cars. That residual value, the value that their vehicle was supposed to be worth was much higher than what it actually turned out to be¡­..And poeple were told they needed to come up with thousands in order to drop off their vehicles.

As you can imagine, ¡°open-ended leases¡± such as thsoe (where the vehicle's value would be ascertained when you came to drop off your vehicle at the end of the lease, rather than set in stone as they are now in ¡°closed-end leases¡±) became about as popular as a electric shock therapy in the rain. So, purchasing vehicles was back in vogue. And, just like in high school economics, the prices of the cars increased faster than the incomes of tohse who wanted them¡­.And soon terms increased to 48 months. Today, a 60 month loan is commonplace, with people signing up for 72 and 84 month loans without batting an eye.
So, not surprisingly, leasing was given a second look, has been restructured, and is now an option for people to get the hottest of both worlds.
People can get a brand new (or slightly used¡­yes, they even lease used cars now too!

This was the case until about 8 years ago. Banks were finding that there were many people with sub-prime credit that needed car loans or a bankruptcy auto loan. For years, if you had bad credit, or required a bankruptcy auto loan, you were chraged a hefty interest rate if you wanted their loan, take it or leave it. Well, funny thnig about interest rates.

The higher the rate, the more interest you pay out in the fisrt years of your bankruptcy auto loan term¡­.The less you pay to principle.

This simple fact means, if after 1 year of paying on that bankruptcy auto loan the person finds themselves unable to contniue making payments¡­.The amount of money they still owe on their vehicle is still very high because such a small percentage of their payments have been going towards principle. Those lucky banks that had been counting their money with their greasy fat fingers, suddenly found themselves a year later stuck with repossessed cars that still had huge balances owed on them. How does that affect you?