7 Steps to Getting a Post-Bankruptcy Auto Loan

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.

, - January 10, 2019

If you recently completed a Chapter 7 or Chapter 13 bankruptcy, there are some steps you need to take toward getting a car loan. It isn’t an easy process, especially with a bankruptcy listed on your credit reports, but it can be done. The trick is to follow the proper steps, and make sure you find a dealership that’s familiar with bankruptcy auto loans.

Getting Your First Post-Bankruptcy Auto Loan: 7 Steps

Before you even start looking for a vehicle, you should make sure your bankruptcy is discharged. From there, make sure you follow these seven steps for a post-bankruptcy car loan approval:

  1. Check credit scores and reportsKnow your credit score, and what’s listed on your credit reports. You’re entitled to a free copy of your credit reports at www.annualcreditreport.com every 12 months, and there are many ways to check your FICO credit score. Check if your lending institution offers free access to your score, or you can go to www.myFICO.com and pay a small fee.
  2. Dispute and fix errors – Double check for any errors on your credit reports, and dispute them as soon as possible. Removing an error can even raise your credit score by a few points, while it’s best to make sure everything is accurate.
  3. Research cars – What are you looking for in your next vehicle? Make sure you check out safety ratings and read the latest expert car reviews.
  4. Create a budget – How much vehicle can you afford? Make sure you have a budget prepared ahead of time, and don’t go above it. You can use our Car Loan Calculator to get an estimate of what fits your budget.
  5. Have a down payment ready – When dealing with a subprime lender, you can’t avoid the down payment requirement. Typically, the minimum amount required is $1,000 or 10 percent of the vehicle’s selling price, whichever is less. Keep in mind that you can also apply a trade-in with equity toward the down payment requirement.
  6. Try to get pre-approved – If you have a good relationship with your bank or credit union, you should try to get a pre-approval before visiting a dealer. You may be surprised by what your lending institution can offer, even post-bankruptcy.
  7. Shop around – Finally, if your bank or credit union can’t pre-approve you, you need to shop around for a lender. If your credit isn’t in its best shape after bankruptcy, you may need to find a subprime lender to work with. You can save time and stress searching for a lender by using our service and filling out our auto loan request form.

Once you get an auto loan, it’s important you keep up with the monthly payments. A car loan can be an excellent way to build your credit back up post-bankruptcy, but you need to make all of your payments on time to make it happen.

Need Help Finding Financing Post-Bankruptcy?

If you checked your credit score and reports, researched vehicles, and have a budget ready, but don't have a lender to work with, let CarsDirect help.

We work with a large network of special finance dealerships who work with subprime lenders that can help people whose credit is holding them back from getting car loan. The lenders at these dealers specialize in helping people with low credit, no credit, bankruptcy, and even repossession. Take charge of your auto financing situation today by filling out our simple car loan request form now!

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.

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