If you have recently gone through a bankruptcy, and are looking to get a new or used car, then finding a bankruptcy auto loan can seem difficult. You need to find a lender that is familiar with, and specializes, in bankruptcy auto loans. There are certainly many available on the Internet; however, you should do some research when trying to choose a lender for your bankruptcy auto loan needs. Here is a guide that offers some suggestions to comparing lenders:
Just because you have recently experienced a bankruptcy, does not mean that you have to suffer even more, by being gouged with incredibly high interest rates. Some lenders will tell you that you have to pay a higher interest rate, because of your recent bankruptcy - this is true. However, post bankruptcy rates are between 10 and 18 percent - not 30 percent. If a lender offers you rates that seem exorbitant, or ridiculously expensive, simply move on to another lender.
You should get rate quotes from at least 3 - 5 different lenders, in order to do a thorough comparison. Just as with good credit and conventional car loans, bankruptcy car loan lenders rates can vary dramatically. Therefore, doing some basic rate comparison shopping can save you a lot of money in the long run.
Get Your Loan - Before You Go to the Dealer
If you're planning on purchasing your next new or used car from a dealer, make sure to have your loan approved and available financing in hand before you visit the dealership. The reason for this is simple - if you don't, you will wind up suffering a much higher car loan interest rate.
Many dealerships increase their profits by padding, or adding to interest rates. There is nothing illegal about this and it is just a part of doing business. For people with past bankruptcies, interest rates arranged between the dealer and the lender can be astronomical. Of course, not all dealerships practice this type of policy. Nevertheless, it is probably much better for you to obtain your bankruptcy loan from an online source just to be sure.
It is important to choose a lender that will allow you to purchase your next vehicle from the individual or dealership of your choice. If they try to steer you toward a specific dealer, tell them no thank you and move on.
Evaluate Terms and Fees
In addition to interest rates and purchase options, you should consider the payment terms and any additional fees or costs a potential lender may charge. Sometimes, lenders will offer an interest rate that appears to be okay, only to require you to pay off the vehicle in a very short period of time.
With these types of lenders, if you ask for a longer term they will generally require a higher interest rate.
There are also lenders that will attempt to add many different, confusing fees and costs to your loan. These may include excessive documentation fees, expensive application fees and other hard-to-understand costs. If a lender is unwilling to extend you a loan that offers reasonable terms and costs, again - move on.
Comparing offers made by bankruptcy auto loan lenders may seem a bit confusing. Nevertheless, if you take your time, ask a lot of questions and are patient, you can find a reasonable post bankruptcy auto loan.