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Bad Credit Auto Loans and Bankruptcy Loans: Are They Equal
Because almost a quarter of all American households are credit challenged, bad credit auto loans are becoming more and more prevalent. Having imperfect credit should not stop anyone from obtaining a car loan, since literally thousands of bad credit loans are written every day in the U.S. Because of this fact, you should have little to no problem buying the car you want. Most banks will see bad credit as a credit risk, so they will only consider shorter loan terms. Your interest rate will also be higher.
How Filing Bankruptcy Can Affect Your Car Loan
Whether you have filed already, or are planning on filing, there are some things you need to know concerning your car loan. Under Chapter 13 laws, if you purchased the vehicle within 30 months of filing, you must repay the full amount of the loan. Under Chapter 7 laws, the lender is entitled to the full retail replacement value. It’s always a good idea, before filing for either form of bankruptcy, to consult with a debt consolidation agency or a lawyer, to see how much you will end up paying. Even though a bankruptcy will appear on your credit report for 10 years, as long as you have fulfilled all of your obligations under the terms of the bankruptcy and it has been discharged, you may still be able to obtain a car loan.
Bad Credit vs. Bankruptcy in Obtaining a Car Loan
A low overall credit score and bankruptcy are both credit issues which banks will not look favorably on. If you find the right one, you will still be able to buy that new car you want, though. The number one thing to know in either situation is make sure you know your credit report and history. With bankruptcy, you may pay a little more and have a shorter loan length, but you will still be able to find a loan that fits your situation and needs.
