How to Get a Car Loan After Bankruptcy

Get Car Financing
Even with poor credit.

January 27, 2012

Getting a car loan after bankruptcy is possible because of the emergence of many new car loan companies. There are a lot of companies that provide flexible payment terms when loaning towards a car with the goal of helping those who had previously encountered financial problems. Additionally, there are also lenders who provide unsecured car loans to people who do not have good credit scores. Finding a car loan for someone who has financial problems may be a challenge, but it is still doable.

The good thing about car loan after bankruptcy is that it is one way of helping a person to build back his or her credit score. At the time that the bankruptcy closes, an individual may start applying for car loans the very next day.

Step 1 -  Credit Score Review

Before applying for car loan it is crucial that the person applying for the loan check his or her credit score to be certain that all accounts are closed that are supposed to be. It is advisable to write an explanation on why the bankruptcy happened in the first place. There are some lenders that may give better rates after reading a good explanation for the occurrence of bankruptcy.

Step 2 - Plan the Car Purchase Carefully

There are factors that are needed to be considered when getting a car loan. For one, a person must know how much he or she can afford to spend for the monthly car loan payment. It’s essential to determine how much the monthly payment will be and that will depend on how much the loan amount is for and the length of payment. It is advisable to purchase an inexpensive car or go for a used car loan after bankruptcy. The interest rate for people who are getting car loans after bankruptcy is quite high, and can be as much as 20%. That is why it is advisable to purchase cheap cars.

Step 3 - Find a Car Loan Lender

There are numerous car loan lenders who make their living by finding individual car loans. These car lenders partner with various financing institutions to offer loans to those who have higher credit risk, including those who are bankrupt. There are also car loan lenders that do their business online. Usually, these online car lenders can provide better deals in comparison to local car dealers.

Step 4 - Explain Your Situation 

It is normal for car dealers to ask for the reason why the bankruptcy happened. And this is a crucial moment for anyone applying car loan rates bankruptcy to explain his or her side. It’s also important to include in the explanation that steps that were taken to address the problem of bankruptcy.

Step 5 - Consider Refinancing

When the car loan is approved, make sure to regularly pay all the monthly bills. Through this, a person may qualify for getting lower interest rates. In around three years, the credit score will significantly improve and this may even result in getting better interest rates through refinancing.

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