Applying for a vehicle loan after filing bankruptcy may seem out of the question; however, it is possible and is also a great way to begin rebuilding your credit. There are some suggestions to keep in mind when researching the loan options.
You can begin applying for an auto financing the day after bankruptcy if needed but you will need to review your credit report before starting. There are certain situations that may be delayed as showing closed on the report due to the bankruptcy not appearing on them. This can affect the rating and possibility of getting a loan so it is important to contact any lenders that are continuing to appear on your credit report. In some situations simply writing an explanation regarding the outstanding balance will help with the loan process.
Know ahead of time what kind of payment you will be able to afford. The type of loan obtained will vary the amount of payment each month as well as the length of the loan. Do not overestimate the payment; in fact it is always a safe bet to reduce the actual amount you can afford by a few dollars. This is a safeguard for your benefit as there may be emergency that comes up and the extra money could come in handy.
Apply for a loan with a lender that specializes in loans strictly for vehicles. These lenders will be able to do comparison rates with a number of finance lenders that are willing to loan to individuals with a certain credit risk. There are thousands of lenders available online that allow you to compare rates instantly. This style of applying for a loan has a higher availability than dealing directly with the dealership you are considering a purchase from. The majority of online lenders will consider your application and directly send you a check making it possible for you to be pre approved in the dealership.
The best route to go is in purchasing the least expensive vehicle you are comfortable in purchasing. Your interest will be higher than average due to the bankruptcy. Buying an inexpensive car means you will be paying higher interest; however, the actual payoff amount will be lower due to the basic price of the vehicle. Auto financing with a bankruptcy will help to improve your overall credit rating if you begin with a small purchase, pay it off on time or early and purchase a more expensive vehicle following the payoff of the first one. Continue to increase your amount financed each time to increase your credit score.