What You Should Know about Financing a Car after Divorce

What You Should Know about Financing a Car after Divorce

Posted on Tuesday, January 2, 2018

You can hand over the ring, but how about the keys?

How do you get on with your life after divorce? Fiscally, many people are completely unprepared for the ramifications of getting divorced. It affects your credit, your income, your bills, and when you go shopping for a car, it can surprise you with just how tough it suddenly is. Here is what to look out for when you arrive on the lot.

Get Financially Literate

One of the tough parts of divorce, for many people, is that couples naturally divide work. One spouse pays the bills, one spouse invests the money, and once the two separate, you might find yourself with some gaps in your financial literacy. If you find yourself befuddled by terms and concepts, set aside a little time, sit down, and get familiar. Research definitions, learn about concepts, and fill in those gaps. It will help you buy a car, as well as get back on your feet.

Check Your Credit And Finances

It is no secret that divorce does a number on your credit. While this factor is somewhat mitigated by changing times, as often both people in a marriage have jobs, incomes, and separate credit, it may still have effects, especially if you get saddled with some debt out of the divorce like a mortgage or if you retain joint credit accounts. That can blow your ratio of credit extended vs. credit utilized, lowering your score. Rather than be surprised, run your credit report and take a look at your score and where you are overall.

Use this as an opportunity to get an overall sense of where your finances lie, as well. Especially if you are getting a car right after a divorce, much of what you have may not be financially settled.

Get Your Paperwork Together

Keep in mind, divorce shakes up your finances, so as you are looking for car financing, you may have to demonstrate you have more than it seems on paper. For example, if you are receiving some form of alimony, that is not going to show up on your credit report or your pay stub, and financing companies will work off what they see. If you can prove income streams, it will help you get a better deal on financing.

A new car can be the start of a new life!

Double-Check Ownership

Maybe you got the car in the divorce and want to trade it in, but is the car in your name? When working with any asset, whether it is a savings account or a car, check with your lawyer that you legally own it and that it is in your name. It will save you a lot of aggravation and potentially expensive court visits.

Shop Around

This is true of car financing in general, but particularly when you are shopping after a divorce. If this is your first time buying your own car, it really pays to get financing first and gather quotes. Look for the lowest interest rate and the shortest terms you can afford, and work from there. Keep an open mind; maybe your dealership has good financing, but what about your local credit union or your bank? Look closely at your options.

With a little planning and forethought, you can easily get a car after you get divorced. To get started on your future, check out the research from CarFoundMe!