Financing a model 3 with a chapter 7 bk discharged...

Financing a model 3 with a chapter 7 bk discharged...

Hey Fellow Tesla lover's....

Here is my current situation... my wife and I recently filed BK chapter 7 and it is discharged. Our scores are both in the low to mid 600's (mine is 624, hers is 655) I am the only income in our household and i make a yearly salary of $126k working for a walmart inc. Since the BK discharge we both have very little debt other than my student loans which i owe currently $51k and she owes 0 debt total. Do you guys think w/ approx. 5k or 7k down I can get approved for the difference to finance a model 3 brand new? If so, where should i turn for the approval?

Thanks for the information all.


badaman | 24 november 2018

Pay off your loan before Tesla.

shank15217 | 24 november 2018

Do you own a house?

hello | 24 november 2018

You could probably get approved at some point... the better question is should you?

With those scores your rates are going to be crazy... pay off your debt and save... save... save... use credit wisely (this would probably not be considered as such) and when you are in a better financial position you will probably be less fleeting with your $$ and not be coming to a forum for credit approval odds.

PhillyBob | 24 november 2018

It sound like you have a tremendous salary but you are heading towards a path of being broke your entire life. You can obviously not afford a $50K vehicle. While I know the M3 is best vehicle ever built, it still just a car .... I am sad to say this. Good luck and I hope you can get some good advise from a real financial advisor and just a bunch of opinionated M3 lovers (or haters)

gballant4570 | 24 november 2018

Check out the used EV market. I think anyone today who needs to buy a car should think EV first and foremost. You did not say whether you simply want a Tesla, or if you need a car. My suggestion would be to pay off your debts, and save enough to buy a Tesla with cash. If you arrange your circumstances to pay off approx. $25k yearly, in about 3 years you can buy a used Tesla with cash. Not only you'll have a great car without a payment, you'll also have learned how to live within your means. I stopped making debts many years ago, and have not made a car payment for a long time. I am now retired (early) and 100% debt free.

Mike UpNorth_ | 24 november 2018

What are you guys talking about??? He just had his BK discharged so he has no debt. Student loans are low rates and tax deductible. That's 'good debt' like a mortgage.

@dominic Why not call Tesla financing and your current bank and ask what options you have? Can't hurt to ask and find out.

hello | 24 november 2018

Perfect... coach the guy into another bankruptcy.

Who cares about the debt service if you do not need to actually pay it, you just need savings for a bankruptcy lawyer.

gballant4570 | 24 november 2018

c'mon, michael, I'm sure you can figure it out....don't make a debt. That is how the trouble started. By the way, student loans are debt. And a mortgage is a commitment. New tax laws render that debt less attractive than it once was. I took money out of other investments and paid mine off early. Basic financial stuff.

Just because you're able to duck out of one problem is not reason to get right back into another one.

The fellow was asking for guidance, I gave the best I had. Others had some good guidance as well.

lumberjack | 24 november 2018

Is a Tesla the right car at this time? Wouldn’t it be better to save some money and get something else cheaper?

Tootelld | 24 november 2018

I just took delivery of my model 3 LR AWD. I discharged chap 7 in July of 2016. I was approved after applying through the Tesla website by chase. The rates aren’t great, especially compared to what others have been getting, but with 15k down I was approved for 6% @ 72 months. I plan on refinancing in a year or so. My credit score was 695 according to Transunion. Hope this helps.

Tootelld | 24 november 2018

It’s probably worthwhile to mention that my annual income is approx 140k and I’m single. I was divorced in 2015 and the child support and alimony crippled me financially to the point where bankruptcy was the only option. Alimony just ended last month, and I wanted to “treat myself”.

badaman | 24 november 2018

LOL bunch of idiots wanting Tesla to get in debt

Mike UpNorth_ | 24 november 2018

Man you guys....

How do you know his BK was for debt mismanagement? Could have been health related expenses that caused him to go belly up while in school not making much money. Wife could have have a health issue and not insured.

He's making ~$126K (at a company I despise but that's besides the point) - so I'm guessing this guy has a brain that works. I think he can manage his student loan payments + a car payment.

If you only want people to buy cars with cash - good luck. That's top 1% choices folks. You didn't need student loans - cool - good for you. Thank your parents. Most people don't have that option.

"coach him into BK"....jesus.,...The car is collateral. The bank will decide if he's worthy enough for a loan. I didn't advise him to buy it with a credit card.

damn you guys are harsh

ODWms | 24 november 2018

Yeah, sometimes folks can be tough, and immediately jump to the “worst case” conclusion when they hear a particular buzzword. Bankruptcy is definitely one.

I agree with some of it. If a “luxury” car isn’t an easy cash purchase, I personally don’t buy. I haven’t had a car payment since 1992, and I’ve had a lot of luxury cars. But my situation is different from others.

TranzNDance | 24 november 2018

@michael, you're right that we don't know OP's situation so I'll refrain from commenting there unless there's more info.

Note that some people got to the 1% because they followed the advice that have been provided in this thread. What you see as harsh was what people likely did for themselves, so it shows caring.

ksalberta | 24 november 2018

Dominic - it is highly unlikely unless you can come up with substantially higher downpayment.

I wouldn't do this if I were you. I wouldn't even apply for a loan with that low a downpayment. The result will probably just be a lower credit score. Instead I would put 1K a month into savings for at least six months (to show you can make payments consistently), and then reevaluate. At that point, you should be able to make a downpayment closer to 12-13K, which looks a lot more favorable. 15K would probably do it. Also you should have gotten your credit score above 650, which would help.

You would be far, far better off paying down the student loan. You want to get your debt to income ratio lower and your credit score higher before buying a luxury car with that credit score and history - and you want to have a few months extra sitting in a savings account after the downpayment to give someone a sense of security.

The reason you need a higher downpayment is that shortly into a longer term car loan, you will be underwater, and your credit history and debt-to-income ratio do not provide confidence that you will be able pay out the loan if you get into difficulties. What's the rush? Why not give yourself a year to improve your finances? No one has to buy a 50K car right now. You could get one this time next year with ease if you just put about 1K a month in savings.

I would recommend that you don't buy this type of car until you have knocked down your student debt.

CST2 | 24 november 2018

I really hope this was a troll!
If not, the Walmart mentality has really gotten to you!

Mike UpNorth_ | 24 november 2018


What do you do for a living?

Mike UpNorth_ | 24 november 2018

I don't mean that to be snarky. I'm interested in knowing where your advice is coming from.

Elizabets07 | 24 november 2018

@Michael: I appreciate you standing up for the OP. You sound like a non-judgmental kind of guy. It’s refreshing.

ReD eXiLe ms us | 24 november 2018

michael: ksalberta is correct. There is nothing wrong with paying down debt while showing patience. Delayed satisfaction is ultimately more satisfying than taking on more debt.

ksalberta | 25 november 2018

Michael - many long years in the systems/regulatory side of finance/commercial banking. OP asked for advice. This was very good advice.

The student debt is non-dischargeable in BK, unless it's a disability/no repayment ability BK. And it will grow (interest added to principal) if not repaid. That's why the OP need to knock it down ASAP.

OP says they are just out of BK. So they don't have much in the way of savings. Also, in case of future misfortune, they are going to be blocked from filing another BK for some years (for Chapter 7 it is eight years from first filing date for the original case) with debt discharge. So if bad luck hits, the OP is not going to be in a good position two or three years from now, and the OP is also the sole earner, which raises risk. One significant car accident and things could rapidly go south.

From the creditor's side (and a decent financial institution will also pay some attention to the borrower's side), the fact of low savings, a low downpayment, and a low credit score means that the risk of default has to be rated above average, and since the loan term is longer, repossessing and selling the collateral would not be expected to recover loss. So a high interest rate is necessary, and an institution wants a higher downpayment to lower the gap between expected recovery and debt, and the institution would like to see more savings.

It is actually quite easy to get moderate credit in most cases once you are discharged from BK, because since the lender knows you can't file again and get a debt discharge for years, their risk of loss is less than one might expect, provided the ability to repay seems basically there.

My advice is to get rid of the student loan, or substantially pay it down. Depending on where the OP lives, that may be an excellent income, but life does not run smoothly, and the OP needs more of a savings cushion so that student debt doesn't turn into an albatross if they do have bad luck.

ebmcs03 | 25 november 2018

Wow! That’s nice! Good ol America. Debts don’t need to be repaid, just forgiven. Get another 8 yr loan ride it out for 3 years and have your debt forgiven again

ST70 | 25 november 2018

@dominic.ceraso- You are what's wrong with this country! Sure...get a Tesla and I'll pay for it!

RES IPSA | 25 november 2018

I am not a financial adviser, but if you have to borrow over a 72 month period to be able to buy a car, you should probably not buy the car. Take that 7k and pay down your student loan. Once that is paid off and you have 20% down payment on a home (or the principle on your current mortgage is significantly paid down in advance by making extra principle payments each month), save up at least of the cost in cash for the Tesla of your dreams. Then borrow the other half and pay it off in 36 months or less.

RES IPSA | 25 november 2018

*save up at least half of the cost of the Tesla

SomerLolly00 | 23 maj 2020

I hope you didn't do that, because it would've been stupid. You can buy a car when you can already afford yourself even its maintenance. By the way, I'd say that you can easily get bankrupted. Generally speaking, I had some difficult financial situations in my life, however getting credits for me was unacceptable. I was working as much as I was able to, however credits seemed too much for me. I was nearly bankrupt when I discovered this highly qualified bankruptcy attorney on kindly offering first analysis of your legal options for free. Now I realize how much work they did for me and how grateful I am for that. This team of professionals is indispensable when in comes to credit card debts, foreclosures, repossessions, garnishments, bank levies, evictions, lawsuits, taxes and harassing phone calls. So, try to check your legal options before filing bankruptcy.

geedub1023 | 23 maj 2020