Can You Get an Auto Loan After Filing for Bankruptcy?

After you have filed for bankruptcy it is possible to get a car loan. It's just a matter of following the correct steps, and you will be able to get an automobile financed. When you file for bankruptcy it can have a devastating affect on your credit file, but that does not mean no one will ever extend credit to you.

Subprime Lenders

The best way to get a car loan after bankruptcy is by contacting a company that makes loans to people with bad credit. You can get a loan immediately after bankruptcy, but it is best to wait a year or two. This gives you an opportunity to re-establish your credit history.

Down Payment

Some lenders may want you to have a down payment, which increases your chance of being approved.

Re-Establishing Credit

The best way to re-establish credit is by applying for a secured credit card. You will need to leave money on deposit with the bank to establish a credit line. If you have $500 on deposit, then $500 will be your credit limit.

Interest Rate

When you apply for an automobile loan, you will receive an interest rate that is higher than the standard rate, because you represent a higher risk to the lender. Your interest rate can be slightly lower if you wait to re-establish credit before applying. There could also be some loan processing fees.

Terms

The terms you receive can vary from lender to lender. Call several lenders to see who has the lowest interest rate and the least amount of fees. When you receive a lower rate, you will pay less in finance charges.