Finding a Car Loan After Bankruptcy

Although you may think it is going to be very difficult, if not impossible to find a car loan after filing for bankruptcy, this is not the case. However, consumers are going to have to face some facts, and are going to have to accept a few compromises on the loan, due to the bankruptcy situation. The major implications are higher interest rates than the average for auto loans, and many lenders may not initially accept your application immediately after a bankruptcy, so expect to wait at least a few months. On the positive side of things, obtaining this car loan will help improve your credit score once you start making payments on it; it will increase it slowly, but it is a start.

The first few months following your bankruptcy, it might be nearly impossible to find a lender; so, you may want to wait about 6 to 8 months before you begin the application process for a car loan. You will also want to retain a copy of your credit score to make sure all debts have been discharged, and that there are no pending actions against you. Even though the bankruptcy will be seen by lenders, it will also show you have no other outstanding debts which you must make payments on; so, this may work to your benefit.

You may also want to consider taking out a few smaller loans, before going after such a big one, like a car loan. A few months, maybe 3 to 4 months after bankruptcy, try applying for a gas card, or a store credit card. This will give you a little backing, as far as being able to make payments, and making them on time. It will also increase your credit rating (very little), as each month passes by. Getting this consistency of the payments on time will really reflect well on you, and increase your chances of getting the car loan when the time finally comes around to fill out the application.

Although it will involve a little work, it is not impossible to get a car loan after a bankruptcy proceeding. You will have to deal with higher interest rates (no matter what), and you must expect the worst, and know that many lenders may turn you down at first. But showing a steady payment history on smaller loans, and waiting a few months before applying, will increase your chances of getting the loan.