The major challenge faced by most people is the purchase of a property; like a car, which is why they opt for loans. However, wiping out your credit score and filing for bankruptcy makes it super difficult and overwhelming to by a car with a car loan.
However, the good news is that it is possible to get a car loan after bankruptcy. And there are reputable auto loan lenders that are willing to assist you all the way.
The fact that you have filed for bankruptcy does not have to limit you from getting an auto loan to finance your car purchase.
The process of buying a car after bankruptcy is also straightforward and stress-free.
How Bankruptcy Works
Chapter 7 bankruptcy is the most common type of bankruptcy that most people file. The Chapter 7 bankruptcy allows the sales of all assets so that the amount recovered id given to the creditor to clear the outstanding debt.
For the complete clearance of the debt and closure of the case, the Chapter 7 bankruptcy usually takes about 120 days, or a couple of months. And then remains on the credit report of the debtor for a period of ten years.
There is also the Chapter 13 bankruptcy that is for individuals with regular and steady earnings.
The Chapter 13 bankruptcy can remain on the credit report of the debtor for up to seven years, and is designed to hold on to assets that may be lost in the bankruptcy process, while giving the debtor a period of 3 – 5 years to completely pay off all debts.
After Bankruptcy – How Long Do You Have to Wait Before Buying a Car?
You do not have to wait so long a time after bankruptcy before buying a car. The trick is; you simply have to make plans to rebuild your credit before you can get a car loan after bankruptcy.
Debts.org recommends that before getting a car loan or any unsecure credit card, you should apply first for a secure credit card and pay off the debt in 12 months. The reason is because; a positive credit history will boast your credit score.
According to Consumer Financial Protection Bureau (CBPB) the better your credit score, the better your chances of securing an auto loan at a fair and reasonable interest rate. And the longer the positive credit history, the less you are seen as a credit risk.
How to Get a Car Loan After Bankruptcy
It is easy to get an auto loan after bankruptcy , and it begins with you.
- Carryout background check: The background checks you carry out include reviewing your credit report for errors that may hinder your loan application. Do your homework. Request for a free copy of your credit report from the major credit reporting agencies and carry out a thorough review. Visit the CFPB website to find out how you can carry out this process.
- Go for a car that you can easily afford: It helps to work within a budget and go for a realistic amount that you can easily afford. Pay attention to the loan interest rat5e and monthly payment, and use the auto loan calculator to find out the perfect loan that suits you.
- Approach a trusted lender: Compare the loan rates and terms of different car loan companies before choosing a lender. It is possible to get a car loan after bankruptcy, but you need to be careful not to end up in a cycle of debts due to a high interest-rate loan.
- Get a preapproval: After choosing a lender, you apply for the car loan. The preapproval give you an idea of what the loan interest rate, monthly payment, and duration will look like, before shopping for your car.
- Visit a car dealership:with the pre-approval in hand, you can go ahead to shop for your car. However, since your credit history has suffered a major blow, you may not get cash enough for a luxurious car.
Car Loans of America is a trusted auto loan company that works with a network of reputable dealerships that offer a wide range of car (both new and used). With us, you can apply for an online auto loan after bankruptcy in as fast as 3 minutes, and receive an instant decision from us.
And with the preapproval we issue to you, you can shop for your car at any of our selected dealerships with the confidence of a cash buyer. We have a dedicated auto loan staff to work you through the entire transaction.
Build Your Credit with an Auto Loan after Bankruptcy
One benefit of a car loan after bankruptcy is that you become a car owner. Another amazing thing about getting an auto loan after bankruptcy is that it helps you to rebuild your credit as you comply with the monthly payments.
As your lender, we will report your payment activities to credit agencies, and over time, your credit history will show some positive improvements. There will also be the option for you to refinance the loan.