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Step 1
Hold off speaking to car dealerships until after the bankruptcy has been discharged.
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Step 2
DebtBegin establishing good credit. Pay your bills on time once the bankruptcy has been discharged. This is the beginning of a whole new credit profile, don’t repeat the pre-bankruptcy mistakes.
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Step 3
Review your credit before you start car shopping. Make sure that all of the accounts that were included in the bankruptcy are actually closed out. Send a letter to the credit reporting agencies explaining the reason for your bankruptcy. This is especially important if the bankruptcy was due to circumstances beyond your control like unemployment or an extended illness that resulted in mounting medical bills. An explanation attached to your credit may help to paint a brighter picture of your financial creditworthiness. If you claimed bankruptcy as a result of poor money management skills, then forgo the letter.
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Step 4
CarAnalyze your current financial situation to determine how much car you can afford. Think long and short term when it comes to what you can afford. Understand that your car loan carry a high interest rate as a result of your bankruptcy. Don’t take on more than you can afford. Remember, this is the beginning of a new credit profile, it’s better to under spend than over spend.
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Step 5
Increase your down payment. The larger the down payment, the less you have to finance and the better the chances of securing an auto loan.
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Step 6
Refinance your car loan a year later. Once you have purchased your car, make sure to make timely payments and then refinance it a year later when your credit rating has improved. You should be able to get a slightly lower interest rate and reduce your monthly payments.
Comments
sneedc said
on 12/27/2008 Great tips here, what I couldn't understand after filing for bankruptcy was how many creditors were willing to take a chance in offering me credit again? DUH!? Oh well, it's all good, that's been over 8 yrs under the bridge now. THANKS and a RECOMMENDATION!