Many people who file for bankruptcy end up needing a new or used car. If you are one of them you might be wondering, "Can I apply for an auto loan the day after I file for bankruptcy?" The answer is yes you can apply, but there is a very good chance you will be denied.
Why you ask? Well there are different requirements that need to be met to get granted an auto loan while in bankruptcy, and they differ depending what type of bk you file. The requirements that must be met will take longer than one day after filing to complete.
Applying for Vehicle Financing in Chapter 7
The process of a chapter 7 bankruptcy is pretty short, but requires a lot. You must first pass a means test to prove you do not make enough to repay your debt on your own. After you have passed, you are required to attend a 341 meeting your with attorney and creditors. If you are in an open chapter 7 and need a car loan you may only apply after this meeting has occurred.
From the time you apply to the time you are discharged from your bankruptcy is usually about two to three months. Because the process is short most lenders will require you be discharged from bankruptcy before granting you a loan. Fortunately, there are a lot of special finance companies that are more than willing to help you after bk.
Vehicle Financing in Chapter 13
Chapter 13 bankruptcy is a repayment plan set up by the judge. Your debt to income ratio is calculated and you are given a three to five year plan that requires you to make monthly payments to your creditors.
Because this is a longer process it is easier to get car loans in chapter 13, but before you can apply you must get permission to incur additional debt from your judge. The problem for most here is this can take up to two to three weeks, and the judge can put a limit on the amount you can borrow as well as the interest rate.
Get a Car Loan after Bankruptcy
Getting auto loans following bankruptcy is easier and less complicated. Regardless of whether you filed chapter 7 or chapter 13, being discharged from your bankruptcy shows the lenders that you now have a clean slate, and have made good on your debts.
Although, you will still have higher interest rates than before bankruptcy and most likely will be required to have a down payment, your chances of being approved have increased dramatically. If you are discharged from your bankruptcy and ready to get a new or used car loan, 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.