How to Get a Car Loan After Bankruptcy #call #credit #check

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How to Get a Car Loan After Bankruptcy

Buying a car can feel stressful enough, but when you have been through bankruptcy it may feel downright terrifying. No matter what the circumstances that led to your filing — large medical bills or a job loss, for example — you probably feel embarrassed and afraid that no one’s going to want to give you the time of day, much less a decent loan.

“The most important thing to know is that you do have options,” says Phil Reed, senior consumer advice editor for the car buying platform He says lenders are interested in working with borrowers who are recovering from financial problems, and in fact some dealerships are eager to sell them a car. “You shouldn’t assume that no one will talk with you and that you have to take whatever someone will give you,” he says.

Here’s how to get a car loan after bankruptcy, step-by-step. (By the way, this advice also applies to someone in the process of a Chapter 13 bankruptcy which usually takes five years to complete. The difference there is that you need to talk with your attorney because you will likely need permission to take on new debt while in a repayment plan.)

1. Get Your Credit Reports and Credit Scores

Yeah, checking your credit probably feels a little like pulling a bandage off a big gaping wound. It’s not going to be pretty. But the lender is going to check your credit, so you might as well know what they are going to see. Besides, it’s always a good idea to review your reports after bankruptcy because mistakes are not uncommon.

You can get your free annual credit reports from and you can get a free credit report summary from that explains how lenders are likely to view your information. Although the lender will pull a customized credit score that likely differs from the one you see, it will still give you an idea of where you stand in general.

Pay particular attention to what the report says about previous auto loans, since those are often more heavily weighted in the credit scoring models used by auto lenders. Positive on-time car loan payments reported during and after bankruptcy can be helpful.

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Connecticut bankruptcy attorney Eugene Melchionne suggests asking yourself the following questions: “Was there a previous car loan involved in the bankruptcy? Was that car loan reaffirmed?” (When you reaffirm the loan you agree to continue to pay the loan balance rather than wiping it out.) “If the loan is reaffirmed, then the tradeline (account) should be showing up on the credit report.”

If you did not reaffirm a loan on a car you held onto in bankruptcy, then the account probably won’t be on your credit reports, even if you have continued to make payments. “In that case, I have the borrower go the dealer/lender prepared with proof of post-bankruptcy payments to create the history,” Melchionne says.

Hopefully wiping out debt in bankruptcy improved your cash flow enough that you can save some money for a down payment. “I tell my clients to plan on living an entire year on a cash-only basis and build up savings before getting back into the credit game,” says Melchionne. The larger your down payment, the less risk your lender is taking. After all, they also have your vehicle as collateral. Need a set of wheels right away but short on cash? A trade-in can help toward a down payment, and you may be able to get more cash for your current vehicle if you sell it yourself.

Gather all your financial information (pay stubs, copy of your credit report, etc.) and dedicate a day to getting preapproved for a car loan. It’s a good idea to limit your shopping to a single day to minimize the potential impact multiple inquiries may have on your credit scores. (You can learn more about how auto loan inquiries affect your credit here .)

Ideally, try to get preapproved before you visit the dealership. “Like any car buying expedition, you have the best leverage if you get approved for a loan before you shop,” Northern California bankruptcy attorney Cathy Moran says.

If your bankruptcy is recent and you haven’t been able to start to rebuild your credit. you will probably wind up with a higher-rate loan. According to Experian Automotive data, the average auto loan rate for someone with deep subprime credit (VantageScore credit score of 300 to 500) was 13.29% for a new vehicle and 18.95% for a used one. (All figures as of fourth quarter 2014.) And the average new vehicle payment for someone in that credit score range was $497, while the used vehicle payment averaged $373.

“If you have an offer in hand you can always then try the dealership,” Reed says. “Quite often they will offer to match it or beat it.”

Don’t assume a “buy here, pay here” dealer is the only one who will work with you. Instead, make that your absolute last resort. “The interest rate will probably be sky high and often it is quoted per month, not per year,” Reed cautions. Plus, “you don’t get a great selection of cars and they may be unreliable” he says, which means you could be stuck with a car payment and large repair bills at the same time.

Also be very cautious about any auto financing contract before you sign on the dotted line. Subprime borrowers can easily end up in predatory loans. It s important to make sure there aren t hidden costs in the contract (for undercoating or other services you don t need, for example) and that you can comfortably afford the payments. If you default on this loan, bankruptcy may not be an option because of your recent filing, so you want to be extra careful.

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Your vehicle loan can help you improve your credit after bankruptcy, provided you make your payments on time. How much can it help?

Equifax compared consumers with deep subprime credit scores (below 550) over a three-year period and found that those who took out an auto loan during that time period had larger increases in their credit scores compared to those who did not. Specifically, the median improvement in scores for those who did take out a vehicle loan was 52 points. The report titled Subprime Auto Loans: A Second Chance at Economic Opportunity states, “This is a 62.5% improvement over the group that did not take out an auto loan, who only improved by 32 points. Even more telling, those that took out an auto loan were four times more likely to have improved their score above 640 compared to the consumers who did not take out a loan.”

Monitor your credit scores after your bankruptcy. Hopefully you will find that once you’ve paid your loan on time for six to 12 months and have been building better credit, your scores have improved. If so, you may be in a position to refinance your car loan at a lower interest rate. (Of course that’s never guaranteed, so don’t take out an expensive car loan thinking you’ll just refinance later.)

And one more tip: If you are reading this because you are contemplating filing for bankruptcy but drive an unreliable car, you may want to replace it sooner rather than later. “I end up sending a fair number of clients out to buy a car before they file bankruptcy,” says Moran. “My thinking is that many are more creditworthy, at least in the car-buying context, than they give themselves credit for, and they often qualify for manufacturer-underwritten loan terms.” But those clients don’t get a “free” car. “The deal is, they pay that eve-of-bankruptcy loan in full according to the terms of the deal, despite the bankruptcy filing,” she says.

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Five Tips to Refinance a Loan after Bankruptcy

Refinance auto loan after bankruptcy

Nobody expects to have to declare bankrupt at some point in their life. However, it happens. This may feel like your financial life is over for good, it isn’t actually the end of the world. What you have to learn is how you can live with the new financial rules that will be imposed on you for a period of time. This also means that if you are considering refinancing your auto loan, you need to do it properly.

When people declare bankrupt, they usually can no longer get credit cards or other loans. This is a difficult situation, because you will find that you need money now more than ever before. The cushion that available credit has long provided has suddenly been taken away from you, and this makes things very difficult.

Refinancing a car loan may be particularly difficult after bankruptcy. That said, if you do manage to find one, you could significantly reduce your monthly outgoings after bankruptcy, leaving you with a little bit more breathing space. It is possible to find auto refinancing solutions after bankruptcy; you just need to know where to look and how to apply for it. The following five tips may be of benefit to you as well.

Tip 1 – Get Your Financial Housekeeping in Order

First of all, you need to gather the following pieces of information:

  1. Your credit score as it stands.
  2. Your credit history in terms of making repayments on car finance.
  3. The balance on your existing car loan.

Tip 2 – Know the Resale Value of Your Vehicle

Look online and in auto magazines to determine the current value of your car. Compare this to the amount you currently owe on your finance. If the value exceeds what your principal loan balance is, you will have a better chance of refinancing it.

Tip 3 – Check Your Current Interest Rate

You need to know exactly what your current interest rate. Simply pick up the phone to your lender, or look at your original agreement, to determine this. Any new finance you find should have an interest rate lower than your current one if you want to be financially better off.

Tip 4 – Make a List of Four to Five Lenders that Accept People with Bad Credit

Search online or speak to people you know about car refinancing lenders that accept people with bad credit. The more you find, the greater your chances of being approved at a lower rate.

Tip 5 – Complete a Preliminary Application with Every Lender on Your List

You must speak to the lenders and explain your personal situation with the bankruptcy and ask them for a quote. Make sure this isn’t a full application, however, as that will show up on your credit file. Be completely open and honest about your current situation. Finally, once you have a list of those that will consider you, apply for real and watch your financial situation improve, even if it is only by a little bit.

How to Get Car Loan after Bankruptcy

Getting approved for an auto loan after bankruptcy can be extremely difficult if you attempt to undertake the task on your own. Typically, bankruptcy filings adversely affect credit ratings and its impact is likely to be felt for years to come. During that period, most of the loan dealers are most likely to deny requests for any kind of loans.

At CarLoanBadCreditUSA, however it is possible to find some lenders that specialize in providing auto loans after bankruptcy but for locating them you may need expert assistance.

Reap An Array Of Benefits With Sustainable After Bankruptcy Car Loans

By managing to obtain an approval for auto loan with bankruptcy record online, you can secure the below mentioned benefits.

  • Can provide you a chance to repair your badly damaged credit.
  • If you purchase old used car, the monthly payments will be affordable.
  • All timely monthly car instalments will be reported to major credit bureaus.
  • You have the rare opportunity to solve your day to day transportation problems.
  • It is the only way to get your finances back on track.

How to Get Pre Approved for Car Loan After Bankruptcy Online

Although securing approvals for auto financing after bankruptcy can be a highly stressful process, with our specialist help, the overall rigors of the task could be instantly done away with.

Nevertheless, to improve your chances of obtaining approval for post bankruptcy auto loan, it could be advisable for you to follow the below mentioned guidelines.

Instead of thinking of purchasing a new car, you can think of buying used car. Such a proposition will require you to borrow less money.

To enhance probability of getting car finance after bankruptcy, you must start saving money for down payment. Alternatively, you may contemplate trade-in of existing vehicle.

  • Check accuracy of your credit profile

    Prior to approaching various loan dealers for getting car financed with a past bankruptcy filing record, ensure that your credit report is free of errors.

  • Prove your capacity to pay car instalments

    Most of the after bankruptcy auto financing lenders will approve your application quickly if you show that you have sufficient income to pay monthly instalments.

  • Try and obtain auto loan pre-approval online

    Such a move will enable you to qualify for a car loan interest rate which is easier to manage and sustain all along loan term.

    Financing A Car After Bankruptcy Discharge Of Debts In A Nutshell

    While you can locate open bankruptcy auto financing lenders, there will be strenuous paperwork involved in the process depending on the type of bankruptcy filing chapter 7 or chapter 13.

    In a typical chapter 7 process, debtor is required to liquidate his assets for repaying all debts which he owes to creditors. The entire process could be over within a time span of about 4 months of filing for chapter 7 bankruptcy. If during that procedure, debtor wants to buy car, he must get permission from the court appointed “Trustee”.

    In a chapter 13 bankruptcy proceeding, debtor has to repay at least portion of his debts to creditors with a payment plan that stretches from 3 to 5 years. But debtor can get a car financed if Trustee feels that debtor is in a position to take on additional debt.

    Enhance Your Chances Of Obtaining Car Loans After Bankruptcy

    Just because you have filed for bankruptcy earlier doesn’t mean that you cannot obtain a car loan. If your debts have been discharged through a bankruptcy filing process, we can assist you improve greatly your chances of getting a post bankruptcy car financing loan. To get started, apply online now!

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    Car Loans For People With Bankruptcy Are Still Possible. You Just Have To Look For Them. Apply Now To Get Instant Approval!

    CarLoanBadCreditUSA can assist you to obtain a car loan with bad credit at affordable interest rates within minutes of your applying online. We work as partners with all direct car loan lenders and even have a nationwide network of lenders that specialize in providing car financing loans of bad credit. Read More.