Car Loans after Bankruptcy: Interest Rates to Expect

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January 27, 2012

Getting car loans after bankruptcy can be tough and even leaving you feeling hopeless at times. Many people who are fresh out of bankruptcy do not know what to expect after the fact. They know that they will likely have higher interest rates or even be declined for a loan, but here are some of the facts you should know before hand.

Will Your Current Car Loan Going To Change?

Likely, not, most are fixed interest loans so they will likely stay the same. However, you may have to sign some kind of form in order to keep your loan.

Will I Even Be Able To Get A Loan?

That will depend on state and federal laws first and then the banks second. Not all states require a waiting period or a long time to wait, while others will require that before you can apply for a loan.

Some may turn you down and while others may give you a small loan with large interests rates. That will be up to the banks. However, most should approve you and give you a decent loan due to the laws. It should be advised to apply for one or two loans and see which one will be a better deal for you.

How High Will The Interest Be?

The Federal Reserve sets the standards on interest rates, so that can very as the base of your rates. Most banks will account your credit score as for a part of it and if your score is lower then your rates will be higher. Since the economic troubles, the Federal Reserve has kept interest rate on the low side to help encourage people to take out loans. They also have been working with the banks to keep the loans flowing, so that should be able to keep your interest lower than it would have been before they lowered the standard rate.

However, you will still likely have higher interest rate, due to the fact that your credit score had been lowered because of the bankruptcy. In addition, if the Federal Reserve raises the interest rates, your rate will rise because of it. Each loan's interest rate will vary as well and it will likely depend on how much of a "risk" they view you as. Therefore, nobody can give you an idea on just how high it will be at any given moment, but you may get an idea from going on the federal reserves website. Also, the smaller the loan is, the less interest you will have to pay.


These are just some of general rules regarding used car loan bankruptcy; though nobody will be able to give you full details until you apply for the loan. Though you may want to do local research for more info on when and how to apply. Interest rates will always vary from time to time and when counting in the current economy, you should be extra careful when you sign the loan paperwork.

It may also be a good idea to have a co-signer who does not have a history of car loan rates bankruptcy.


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