For various circumstances, thousands of individuals file for bankruptcy every year in the United States. A contentious divorce, an expensive medical emergency, loss of a job or a spouse … there are many legitimate reasons bankruptcy might be the best course for someone. Just because an individual files for bankruptcy. however, doesn't necessarily mean that person is unwilling or unable to handle a car loan. Bankruptcy is a major blow to one’s credit. Fortunately, there are lenders who will provide car loans for people with bad credit. If you’re not sure how to get an auto loan after bankruptcy, read on for basic advice to get started.
What You Need to Know to Get a Car Loan After Bankruptcy
Before you apply for a car loan, as unpleasant as it may be, you’ll need to check your credit score. Pay close attention to what your credit report divulges about any past car loans you’ve had. If you have a history of on-time car-loan payments before and/or during bankruptcy, that’s helpful. Besides knowing what your credit report says, be aware borrowers with bad credit increase their odds of securing a loan by coming up with a large down payment. The more money you pay upfront, the less risky it will be for lenders to loan you money. It may be worthwhile to save up for a solid down payment before you approach lenders.
Avoid These Pitfalls When You Have Bad Credit and Need a Car Loan
Not all car loans for bad credit are loans you want to become involved with. Unscrupulous lenders will take advantage of the fact your financing options are limited. Don’t agree to a loan without understanding exactly what things are included in the loan amount. Don’t let a lender try to sneak in charges for services you don’t want or need, such as undercoating or roadside assistance. Similarly, don’t let a lender talk you into a loan with a monthly payment you’re not sure you can make. As a subprime borrower, it’s critical you only agree to a loan when you’re confident you’ll be able to make the monthly payments.
You’ve Secured a Loan: Now What?
The best way to repair your damaged credit is to rebuild it by proving you are a responsible, reliable borrower. Surprisingly, after declaring bankruptcy, many consumers find they have more expendable cash than ever. With their debts wiped out, they have a clean slate so to speak. Even though you might be able to save up enough money to pay cash for a car, it’s better in the long run to secure a loan and make your payments on time; it will improve your credit. After you have a six- to 12-month track record of on-time payments, your credit score will improve. You may be able to refinance your loan at a better interest rate, which will help you pay it off sooner and further improve your credit score.
If your credit is less than stellar, don’t assume you will not be able to qualify for a car loan. At Deboer’s Auto Sales and Service, we understand even responsible people are thrown curveballs in life. We will work with you and provide guidance so you’ll be able to secure a loan for a new car. Everyone needs transportation, and we will do everything we can to help you afford a reliable car. Contact ustoday to get started!