Tips on Getting a Bad Credit Auto Loan After Bankruptcy

Having a bad credit record does not mean that it is not possible to get an auto, or car, loan. Many people with a poor credit rating still manage to get auto finance, and drive away a new or used car from borrowed money. Bad credit auto loan financing is undoubtedly possible, and we offer tips on buying a car elsewhere on this site, with a special article on bad credit car finance in the UK.

The personal debt situation of some people, though, may have become so bad they have been declared bankrupt. Is it still possible to get an auto loan even after becoming a bankrupt? The answer to that may well be "yes", but it does depend on the local bankruptcy laws in your country or state, and any orders the bankruptcy court may have made about taking out further loans.

The article below has been included here as it offers some straightforward advice and tips for those who have been through a bankruptcy court and been declared bankrupt, yet still want to apply for an auto loan. While this article is aimed at the American market, there may be tips that are useful to you in your own country.

Car Loans After Bankruptcy - Tips to Getting Approved

A car loans after a bankruptcy is one way to help build back your credit history. In fact, once your bankruptcy closes, you can apply for a car loan the next day. To get approved with the best rates for your car loan, follow these tips.

Review Your Credit Report

Before you start applying for a car loan, check out your credit report and make sure all your accounts are in order. It is not uncommon after a bankruptcy to see open accounts that should be closed, which hurt your credit rating.

While looking at your credit report, consider adding a page explaining the situation that resulted in your bankruptcy. If there were extenuating circumstances, lenders may approve you for a better rate than under normal conditions.

Plan Your Car Purchase

Before purchasing a vehicle, decide what you can afford in a monthly car loan payment. This will help you decide which financing package is best for you. Both the loan amount and length of payments will determine your monthly payments, so there is flexibility in determining which vehicle you can afford to purchase.

Use A Car Loan Lender

Car loan lenders make their money by finding you a loan. Car loan lenders work with several financing partners to back loans with all types of credit risk, including bankruptcies.

Online car loan lenders deal with thousands of loans, and can usually find you a better deal than your local car dealerships. Online car loan lenders will send you a check when you are approved, basically making you a pre-approved car loan buyer.

Explain Your Situation

Car loan applications will ask if you have ever declared bankruptcy and why. This is your chance to explain what led up to the situation and what steps you have taken to resolve your credit situation. Be sure to include improvements in your financial history too.

Consider Refinancing

Once you are approved for a car loan, keep your eye on future refinancing. By making regular payments on all your bills, in a year’s time you could qualify for significantly lower interest rates. In three years, you can build your credit score to near excellent and qualify for even lower rates.

To view our list of recommended auto loan companies online, visit this page: Recommended Auto Loan Companies Online.

Carrie Reeder is the owner of ABC Loan Guide, an informational website about various types of loans.

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