Getting a car loan after bankruptcy can be quite difficult because most lenders will consider you unable to repay the loan. Also, taking out a post-bankruptcy car loan may be long and tiring. Despite all of this, it is not impossible to get a car loan after bankruptcy. Growing your credit and going for lenders with flexible requirements gives you a good chance at getting car loans after bankruptcy. You will need to put more effort into searching for the best lenders willing to offer car loans after bankruptcy.
After bankruptcy, there is a certain period you are to wait before applying for a car loan. The waiting period depends on whether you filed a Chapter 7 or Chapter 13 bankruptcy. However, even in this waiting period, it is advisable to search for lenders willing to work with borrowers after bankruptcy. This write-up contains methods for getting a car loan after bankruptcy.
How Can You Get a Car Loan After Bankruptcy?
Most car loan lenders consider more recent bankruptcy a high risk when accessing application information. They may decline your loan application because bankrupt borrowers cannot repay the loan. For this reason, it is important to find the best lender willing to offer car loans after bankruptcy. However, using the following steps, you can easily get a car loan after bankruptcy.
Consider whether or not it’s a good Idea
If you file for bankruptcy, you will likely encounter some financial troubles. Getting a car loan may be a way out of car expenses, but be sure to consider whether or not it is a good idea. Getting a car loan at this point may not be a good idea for your finances. Using the following, you can decide if it’s a good idea or not.
- Loan affordability.
- Current means of transportation.
- Cash payments.
Review your credit
A bankruptcy on your credit record lessens your credit score. It affects your credit and lasts for as long as seven to ten years. Fortunately, bankruptcy lowers its effect on your credit as it grows older. This means that over the 10-year waiting period for its effect on your credit, your credit score tends to be higher by the ninth year.
Having good credit gives you better chances of getting flexible loan terms and rates. However, before getting a car loan after bankruptcy, check your credit score to see if you are eligible for one. If your credit is not good enough for a loan, it is wise to work towards improving your credit before applying.
Set a Budget for Car Loan Down Payment
Making a down payment on a car loan can significantly improve your chances of getting approved for the loan. It shows the lender that you are responsible and that you can repay the loan. Borrowers who have low credit due to bankruptcy should consider making down payments on the car before taking out car loans. Making this payment means you get to borrow lower amounts on car loans and lower the lender’s risk. This also means you get to lower the interest rate on your entire loan.
Compare Lenders
The best way to find the best car loan after bankruptcy is to compare different lenders. Every lender has its loan requirements concerning credit score, income, and employment history. Comparing lenders is a good way to find a lender that works best for you.
As you shop around for lenders, some will specify if they do not offer car loans after bankruptcy or the specific credit score they require. You can also compare lenders by prequalifying for car loans. This allows you to compare interest rates and loan terms without affecting your credit score.
Where to Get Car Loans After Bankruptcy
When comparing lenders, it is wise to consider loan options outside the dealership. You can check if you can get car loans from credit unions or banks after bankruptcy. Credit unions are more flexible when offering loans with bankruptcy issues. Unfortunately, recent bankruptcy may be declined by credit unions if you have unpaid debts to them. However, the lists below are some lenders that may offer you car loans after bankruptcy.
- Bad credit lenders.
- Credit unions.
- Buy-here, pay-here dealership.
Aside from using these lenders, you may get a car loan after bankruptcy by adding a cosigner to your car loan application. A cosigner is a person who has good credit and is ready to cosign a car loan for you.