How to get a car loan after bankruptcy?07/08/2019
Sometimes life doesn’t go according to plan. Maybe you’ve filed for bankruptcy and now need to get a car so you can get to work. During bankruptcy what can you do? If you need to get auto loan or refinance auto loan during or after bankruptcy here’s what you can do.
How Soon After Bankruptcy Can I Get a Car Loan?
Yes, you can get a car after filing for bankruptcy. However you can’t apply right away. You’ll need to wait until your bankruptcy is discharged. This occurs about 60 days after your 341 meeting. That being said, the longer you wait after bankruptcy the better you interest rates will be. It is best to wait as long as you can so you have a chance to fix your credit first. If at all possible try to wait 2-3 years before applying for a loan.
Auto loan rates after Bankruptcy
Rates of auto loan lenders go up after you have had a bankruptcy. They will nearly always give you a high interest rate. Car loan rates fluctuate with time. They also have a huge interest rate range. However, people who have a credit score lower than 600 pay between 13% and nearly 21% more than those with higher scores. Since bankruptcy impacts your credit score so much you’re probably looking at these higher numbers. If you must get a car you can, and then in a few years when you have better credit you can refinance auto loan. If you do refinance auto loan you can get a much better interest rate.
Getting an auto loan after bankruptcy
There are a few ways to get the most out of getting a car right after bankruptcy. First, don’t buy new! Get a good used car with plenty of life left in it. You’ll want to afford it comfortably, and new cars rarely are economically reasonably after a bankruptcy.
Reestablish your credit as quickly as possible. One way to do this is to get a credit card. Getting a credit card with a low credit score often means ridiculously high interest rates. However, that won’t be a problem if you pay it off every month on time and never accumulate any interest on it. These high interest rate cards may make you nervous about paying so much more than the original amount, but again you don’t have to pay interest if you’re careful and always remember to pay it off before the due date. A history of always paying it off on time will improve your credit score, and make lenders more likely to consider you.
You’ll need to be persistent in order to get a good deal. You’ll likely have to call every dealership in your area before finding the one that will give you the best deal. Don’t let them check your credit score until you are sure that you are going to get a loan from them. Too many credit checks will lower your credit even further. Instead ask them for an idea of what they can do for you. Then once you have narrowed it down, you can go ahead and have them check the score and give you an exact quote.
Bankruptcy doesn’t mean you can never get a loan again. You can find a good reliable car even with a low credit score, just be smart about searching to find the right one for you.