Obtaining a new line of credit after your discharged bankruptcy is a conflict we often hear about from filers. Many bankrupt clients believe they will not be approved for a bankruptcy auto loan because of their bad credit due to the bk.
In reality, you can be approved for auto loans and some dealerships will welcome you with arms wide open. These dealerships may even solicit you offering “deals” on cars before your bankruptcy has been discharged. But beware of these offers; there are some that aren’t good for your wallet or your credit.
Be Ready for Auto Financing after Bankruptcy
Interest Rates and Down Payments:
After a bankruptcy your credit score is usually in the sub-prime category and many lenders and dealerships will consider it a “high risk” loan. Because of this the interest rates offered and the down payments required will be more significant than they would be with the history of bk. The good news is once you make a year or two of timely payments your credit score should have significantly increased and you may be eligible for a refinance to lower the interest rate.
Have a co-signer:
If you believe that the interest rate you were offered on your loan is too high for you to pay on your own, ask a family member or friend with good credit to co-sign the loan. This could help you get a better APR and lower monthly payments.
Wait for your discharge:
While it is possible to get an open bankruptcy car loan it is usually recommended to wait until you’re discharged. This will show the lender that you have successfully completed your bankruptcy obligations and have since learned your lesson.
Rebuild your credit:
If it is feasible to do so you should generally start rebuilding your credit with smaller purchases such as a secured credit card. If this is not feasible then an auto loan is the next best way to rebuild your poor credit back into good standing.
Remember, a bankruptcy loses importance over time:
The longer it has been since you have filed for bankruptcy the less important it will be to future creditors. A bankruptcy can stay on your report for 7-10 years, but the first year after the bk is when it makes the most significance.
Get a Bankruptcy Car Loan Today
If you’re recently out of bankruptcy and looking to get into the most affordable auto loan available apply online today. Here at BankruptcyAutoFinancing.com we work with a nationwide network of sub-prime lenders that have all the tools and experience to get you approved and in that new car in just a few 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.