Anyone that has ever filed for a personal bankruptcy has most likely has their mailbox filled with junk mail from local car dealerships. These fliers typically state that regardless of good credit, bad credit, no credit or bankruptcies you can be approved for a car lease or auto financing with no money down and no co-signer. You know that saying too good to be true? This is a prime example!
Unfortunately, getting an auto loan after bankruptcy from a reputable and trustworthy dealership is not going to be that simple. Being approved for auto financing with a bankruptcy on your credit report depends on many different factors. These include (but aren’t limited to): which chapter you filed (7 or 13), that status of your bankruptcy (open, discharged, or dismissed), your credit score, and your debt to income ratio.
The Chapter and Status of your Bankruptcy
As most of you know by now a chapter 7 bankruptcy is a liquidation plan in which your trustee will liquidate your assets to repay your creditors. This process usually only takes 3-5 months from filing to discharge. A chapter 13 is a repayment plan in which the judge sets up a partial repayment plan to your credits based on your income. This usually takes 3-5 years to complete.
Lenders will look to see which chapter you filed and how long ago you filed too see where your debt stands at the time of applying. If you have filed chapter 7 most lenders will require you be discharged because it is a short process, and after you have been discharged you are presumably debt free. If you have filed chapter 13 some lenders may grant you a car loan in an open bankruptcy because the process is much longer and you need a vehicle to get to and from work to make good on your payment plan.
A dismissal is detrimental to an auto loan application approval. This is because a dismissal means you did not show good faith during the bk process and it was unsuccessful.
Finding Reputable Bankruptcy Dealerships
Here at BankruptcyAutoFinancing.com we work with a network of reputable and trustworthy bankruptcy dealerships. These lenders understand the delicate situation you are in and grant loans with you in mind and that you can afford. To find one of our dealerships in your area apply online today.
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.