Buying a car is one of the biggest investments one will make in their life, and getting good auto loan terms is important. It’s hard to know if you’re getting a great deal when you have good credit, but when you have a recent bankruptcy on your credit report it is even more difficult. Below we have laid out a short list of what you can expect to get as far as loan terms with bankruptcy on your credit report.
Bankruptcy Auto Financing Terms
Unfortunately, the bankruptcy has probably left you with a not-so-great credit score which means you are more susceptible to higher interest rates, shorter loan terms, and a down payment may be required.
Higher interest rates: Many bad credit bankruptcy auto loans carry interest rates that average about 8 percentage points higher than the rates offered to good credit buyers. This is because lenders see poor credit ratings to be a high risk and want to save themselves if you should default on the loan. Because the APRs are higher on these loans the monthly payments will be higher also, but as long as you make the payments on time you may be eligible to refinance in a year.
Shorter Life of Loan: Many people look at monthly payments when deciding if they can afford the vehicle or not, and if the payments are too high they have the option of extending the loan. When you are post-bankruptcy you often don’t have this option, because the lenders want the note paid off as soon as possible. This is why we suggest financing a used car after bankruptcy. The price is cheaper and therefore, the payments will be also.
Down Payments: A down payment is most likely going to be a requirement of all subprime lenders. They view money down as an investment into the car and they believe you are more likely to pay the finance amount back if you have invested your own cash into the vehicle. The down payment is not just for the lender though, the more you put down the lower the monthly payments will be and the less financing you need. Keep saving that money!
Online Bankruptcy Auto Loans
Here at BankruptcyAutoFinancing.com we have a network of lenders that work with bankruptcy clients to get them into an affordable auto loan. They have all the tools and experience necessary to give you your best chance at an auto loan approval.
Apply online today to see how much you could pre-qualify for you, and you could be driving away in your new or used car in a few short days.
Remember, we are not lawyers and cannot give legal advice. The situations discussed are only our experiences over the years and may vary with each customer.