Car Loans after Bankruptcy - Applying for a Bad Credit Car Loan
When applying for a car loan after bankruptcy, there are many factors to consider. For the most part, individuals with recent bankruptcies expect higher rates. However, there are ways to qualify for a new or used car loan that does not involve over the top interest rates. Here are some tips on applying for a car loan, which could potentially save you money.
Can You Finance a Car after Bankruptcy?
Although many finance experts discourage buying a car immediately following a bankruptcy, it is possible to qualify for automobile financing. Unfortunately, some lenders do not offer bad credit auto loans. In this case, these lenders may not approve a loan request.
If looking for a bad credit auto loan, choose lenders that favor individuals with low credit scores. These lenders are referred to as sub prime lenders. They work specifically with persons who have filed bankruptcy, bad credit, foreclosures, repossessions, etc. Regardless of your bad credit situation, sub prime lenders are usually able to finance everyone.
Increase Your Chances of Approval
Unfortunately, if your credit score falls below 500, it may become difficult to finance an auto loan - even with a sub prime lender. If this presents a problem, attempt to improve your credit. Following a bankruptcy, the only way to boost a low credit score is to acquire new credit accounts and maintain a good history with creditors.
Begin re-establishing credit by applying for a secured credit card. Because of your negative credit rating, these credit cards are easier to qualify for. However, be prepared to pay a deposit and several upfront fees. After a bankruptcy, it usually takes two years to build good credit. If possible, postpone financing a car until you can qualify for prime rates.
Apply for Car Loan with a Sizeable Down Payment
Buying a vehicle with a down payment denotes your seriousness; this may also help you get an interest rate reduction. Even if the dealer or auto lender is unwilling to offer a lesser rate, a down payment means you are financing a lower amount. In this case, a large down payment could amount to affordable monthly payments.
Our Recommended Bad Credit Auto Lenders:
Recommended Auto Lenders:
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When getting a new auto loan, make sure you line up your financing before you visit a dealership. Once you have your financing in place, you give yourself an advantage when working with dealerships or sellers.
Sometimes a dealership will offer you a better rate than the financing you already have lined up, but its good to have the advantage by already having your financing in place.
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