Getting an auto loan after a Chapter 11 bankruptcy can be a challenge, but it’s not impossible. It will take some time and a bit of work to find the right lender, but if you follow these tips you should be able to find an auto loan that fits your needs.
Chapter 11 bankruptcy is reserved for corporations, S corporations or a sole proprietorship. If you have incorporated your business and are forced to file chapter 11, your personal assets should be exempt. However, a chapter 11 filing can affect your credit rating. If your business is set up as a sole proprietorship, then both your business and personal assets will be affected. Chapter 7 and 13 are considered a personal bankruptcy, and these will absolutely affect your personal assets and your credit report.
If possible, it’s best to wait a year or two following a bankruptcy before applying for a loan of any sort. It’s not impossible to get a loan shortly after your bankruptcy is completed, but you will have a much easier time and qualify for a better rate if you can wait before applying for a loan.
Keep a close eye on your credit report. Your credit rating will take a pretty good hit when you file for a bankruptcy, but if you abide by your bankruptcy restructuring agreement and pay all of your bills on time, your credit will rebound over time. There is always the chance that some incorrect information will make its way onto your credit report. If this is the case, be sure to report the adverse information to the appropriate reporting agency immediately. Use secured credit cards to improve your credit rating.
This is what lending institutions call the type of loan that they make to people who have been through a bankruptcy. They are also referred to as bankruptcy car loans. Your interest rate will be higher, as will the fees. There are companies that specialize in bad credit loans and are happy to deal with people that have bad credit or even no credit at all. You will be considered sub-prime if your credit score is below 600. Be prepared to offer some type of collateral when shopping for a loan.
As with any loan, it’s important to shop around. Check all of the sources that are available to you. Banks are not going to be as easy to deal with as loan and finance companies. Look for ones that specialize in sub-prime loans. Get quotes from as many lending companies as possible. Look at not just the interest rate but all of the terms and conditions as well. Having a large down payment will help secure your loan and get the interest rate down.
If possible, try to get a pre-approval before you start shopping. Finding the perfect car only to be turned down for financing can be hard.
Finding a car loan after a bankruptcy is difficult but not impossible if you follow these tips.