Can You Qualify for Auto Loans after Bankruptcy?
Undoubtedly, bankruptcy is quite a challenging state. Apart from all the financial troubles, you go through; it can also prove to be a cause of humiliation. However, it doesn’t mean that it can refrain you from buying a car. It is a common myth among people that post bankruptcy; they will not be able to take a car loan as their credit score is ruined, which could have been true if not for Post-Bankruptcy Auto Loans.
Now that you know it is possible, let us dive into how you can qualify for car loans after bankruptcy and the best practices that can help you:
In brief, you must have been unable to pay-off your debts, which is why you filed for bankruptcy. At this stage, you will not be willing to take a loan that comprises of hefty monthly installments and therefore, you must keep calm and have patience.
The market is full of lenders who will be eager to offer you an auto loan after bankruptcy. However, do keep in mind that the interest rates might be sky high. The best choice you can make is come out of that bankruptcy first and then avail car financing at the slashed down interest rates. Ideally, a wait of two-three months will put you in a good position.
A Source of Income is Vital
Try to be in the shoes of the lender. If the person is going to overlook your bankruptcy, he is taking a bigger risk than you can imagine. To cope up with the high risk, he will be demanding a high interest rate. Now, you can either go with it or reduce the risks involved. This can be done by looking for a job that offers you a consistent pay. In that case, your lender can rest assured that your monthly payments will actually be a feasible affair for you.
Do note that some of the loan lenders might not even consider giving you an auto loan if you do not have a stable job. If you can save a decent amount after your monthly expenses, the lenders find it easier to give loans to you.
Most of your traditional lenders and even banks won’t be willing to lend you money post your bankruptcy declaration. Therefore, you need to search beyond them if you are serious about your loan. Several lenders in market specialize in providing bankruptcy auto loans. You may find them online as well.
Buy Something Inexpensive
If you buy a used car, you can definitely cut down on the loan amount. That way it will be easier for the lender to provide you an auto loan.
Down Payment Works Wonders
Obviously, when you put down a substantial amount as down payment, you can lower the loan amount and as a result, you will have to pay a lot less interest rate. Before thinking about a car loan, you must start saving so you can pay a decent amount to the loan lender. However, do not overdo it by paying a hefty amount. Usually 20% of the amount lands you in a good position.
All these pointers will certainly enhance your chances of getting easy approval on auto loans after bankruptcy.