Finding Your First Post-Bankruptcy Car Loan

Getting a post-bankruptcy car loan could prove to be very difficult for many individuals. Here are a few things to consider about finding your first auto loan after filing bankruptcy.

Reestablishing Credit

After a bankruptcy, it is critical that you get started reestablishing your credit. A bankruptcy is going to stay on your credit file for approximately 10 years. Although the bankruptcy will be there, that does not necessarily mean that you will not be able to secure financing for a car during that period. It simply means that fewer lenders will be willing to work with you and you are going to have to work to establish your credit again.

There are many different ways that you can help reestablish your credit. For example, you could utilize a prepaid credit card or a secured credit card. Credit card companies regularly report to the credit bureaus. If you utilize one of these cards, you will be able to get on a regular payment schedule, which will reflect favorably on you. Making regular payments is one of the most important things that the credit bureaus look at when determining your credit score. Therefore, you want to set up some type of account that you can make monthly payments to and stick to your payment schedule. Make sure that you are not late on any of your payments, and it will start to pay big dividends for your credit score.

Contacting Dealers

You should also begin the process of contacting dealers in your area. You need to call them and talk to a representative about your situation. Tell them that you have had a bankruptcy in the past and ask if it will be possible for you to get financing. Some dealers regularly work with those that have had bankruptcies in the past. Others will not even consider working with you.

There are many car dealers out there that advertise the fact that they will approve anyone. Some of these places use slogans such as "Buy Here, Pay Here." Many of these places will require you to make a weekly payment in order to get the car that you want. These dealers are going to charge very high rates of interest compared to what you would get elsewhere. However, this may be one of your only options when it comes to getting a car after bankruptcy.

Cosigner

You also might want to consider looking for a cosigner before trying to purchase a car. If you have a friend or family member that has good credit and would be willing to vouch for you, this could potentially save you a great deal of money. The lender will be willing to extend an interest rate based on the cosigner's credit, which will be much lower than what you can get. This will lower your monthly payment and the amount of money that you pay to them over the life of the loan.

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