Can I Get a Car Loan After a Bankruptcy?

Get Car Financing
Even with poor credit.

By

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.


, - June 19, 2018

Regardless of if you filed for a Chapter 7 or Chapter 13 bankruptcy, you can still qualify a car loan. If you filed a Chapter 7, it’s typically best to wait until it’s been discharged before applying. As for a Chapter 13, because it takes years to complete, you may be able to get a car loan during bankruptcy, rather than waiting for it to be discharged. Even if your bankruptcy hasn’t been discharged, you can get yourself ready for the car buying process and prepare ahead of time.

Preparing for Bankruptcy Auto Loans

Before you head to a dealer to discuss car loan options, make sure you’re prepared. Walking in blindly will only make you more frustrated, and it’s a good idea to have a realistic goal beforehand.

To get yourself ready to take on a car loan after bankruptcy, follow these three steps:

  1. Know where your credit stands – Request a credit score and your credit reports. You’re entitled to one free copy of your credit reports every 12 months from each of the three national credit bureaus (Experian, Equifax, and TransUnion). If you need more than one, you can pay a small fee for any extras. Once you have your reports, check for inaccurate information, and dispute any with the reporting credit bureau. If you’re bankruptcy has been recently discharged, make sure it’s listed on your reports. If not, make sure you have a copy of your discharge papers to bring with you to show the lender.
  2. Check with your bank or credit union – Before you head to a dealership, check to see if you can get pre-approved with your bank or credit union. If you have a good relationship, they may be willing to finance you. But if they turn you down, you’ll need to look for a special finance dealership that works with subprime auto lenders.
  3. Budget and prepare – The last step is to prepare a budget. Know how much car you can afford by looking at your finances or using online car loan calculators. An estimate from online tools gives you an idea of what type of car you could finance. And because you’ll be dealing with a subprime lender, make sure you budget for a down payment. The minimum required is generally the lower amount between $1,000 or 10 percent of a vehicle’s selling price, but this can vary by lender. If you’re able to put more than the minimum required down, you should. The more you put down, the lower your monthly payment will be and the more you’ll save on interest charges over the course of the loan.

The Bottom Line

Filing for bankruptcy will put a dent in your credit score. But with careful planning, you can still qualify for a car loan. But where do you go to find a dealership to work with? Here at CarsDirect, we can help you find a local special finance dealer with the lending resources available to people in many challenging credit situations.

We work with a nationwide network of dealerships that have lenders that specialize in bad credit, no credit, and even bankruptcy auto financing. Take the first step toward rebuilding your credit and getting the car you need by filling out our auto loan request form today.

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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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