When you buy a car with high interest car loans, the actual value of the car decreases every year with the annual depreciation. Though the depreciation for the car happens, the initial loan principle amount does not go down. This is why auto financing while in chapter 13 bankruptcy will prove to be useful. When you convert your loan for auto loans after chapter 13 bankruptcy the principle amount for the loan you have purchased will either get relieved off or it will reduce consecutively.

[b] How does it work? [/b]

Once you pay at least $40,000 to buy a new car and also get auto loan for the same amount. You also pay ‘X’ amount as the interest rate for the loan you are buying. After three years of vehicle purchase the vehicle’s actual value comes down considerably with car depreciation value. Say that after three years the actual value of the vehicle comes down to $10, 000 but still you will be paying the car loan for the actual principle of $40,000 and the same ‘X’ amount of interest. This eventually makes the buyers pay an increased value for the car. To prevent this unwanted loss of money over the car loan, the owners are suggested to get Chapter 13 bankruptcy car loans.

If you file for the chapter 13 bankruptcy car loan then there are chances that the actual principle amount for the car loan bought may come down. Sometime of you have overpaid for the car you can also demand with the lender to wipe out the remaining balance. Say the actual value of the car now is only $10,000 and you have aid so far $30, 000 from its actual value, now you can negotiate with the lender about cancelling the remaining $10, 000 principle and also the interest for the same.

[b] The Checkpoints [/b]

For buying auto loans during chapter 13 bankruptcy the byers should have first filed for a bankruptcy at least 910 days before. This means it is only after 2 and half years of car purchase you will be able to file for this type of loan and enjoy getting rid of unwanted interest charges. The congress has brought in this rule just to ensure that the buyers do not advantage of the leverages offered by the government and offer loss to the auto financing companies.

Because of getting auto loans during chapter 13 bankruptcy you can cram down your loan principle amount that exceeds the actual value of the car you are driving.

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