Car Loans After Bankruptcy - Tips to Getting Approved

Tip! After filing for bankruptcy, many people are afraid they wont be able to buy a home for 10 years while they have a history of bankruptcy on their credit report. Usually 18-24 months within a bankruptcy discharge, debtors can qualify for a loan on the same terms as if they had not filed for bankruptcy.

A car loans after a bankruptcy is one way to help build back your credit history. In fact, once your bankruptcy closes, you can apply for a car loan the next day. To get approved with the best rates for your car loan, follow these tips.

Before you start applying for a car loan, check out your credit report and make sure all your accounts are in order. It is not uncommon after a bankruptcy to see open accounts that should be closed, which hurt your credit rating.

While looking at your credit report, consider adding a page explaining the situation that resulted in your bankruptcy. If there were extenuating circumstances, lenders may approve you for a better rate than under normal conditions.

Before purchasing a vehicle, decide what you can afford in a monthly car loan payment. This will help you decide which financing package is best for you. Both the loan amount and length of payments will determine your monthly payments, so there is flexibility in determining which vehicle you can afford to purchase.

Tip! The debtor must get counseling and certification from a non-profit credit-counseling agency before the forms can be filed for your bankruptcy.

Car loan lenders make their money by finding you a loan. Car loan lenders work with several financing partners to back loans with all types of credit risk, including bankruptcies.

Online car loan lenders deal with thousands of loans, and can usually find you a better deal than your local car dealerships. Online car loan lenders will send you a check when you are approved, basically making you a pre-approved car loan buyer.

Car loan applications will ask if you have ever declared bankruptcy and why. This is your chance to explain what led up to the situation and what steps you have taken to resolve your credit situation. Be sure to include improvements in your financial history too.

Once you are approved for a car loan, keep your eye on future refinancing. By making regular payments on all your bills, in a year's time you could qualify for significantly lower interest rates. In three years, you can build your credit score to near excellent and qualify for even lower rates.

Tip! When you’re in a financial bind, bankruptcy is not the only way out. There are many alternatives to bankruptcy if you are willing to put out the time and energy. It could save you much unnecessary hassle.

Carrie Reeder is the owner of ABC Loan Guide, an informational website about various types of loans.

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Car Loans After Bankruptcy - Tips to Getting Approved