Tips for Getting Auto Loans After Bankruptcy

• Posted on Autos.com Editor
• in Auto Loans
• on October 7, 2013

Getting auto loans after bankruptcy can be very difficult, especially if you’ve just declared bankruptcy and don’t have any extra money. If you’ve found yourself in a situation where you have no other choice than to get a bankruptcy car loan, follow these tips to start down a road of financial responsibility and get the best available auto loan rates with one of these very bad credit car loans.

Tip 1: Look for Other Types of Loans

A bankruptcy car loan is just about as bad as you can get in terms of presenting a high risk to any lender you encounter. You may be better off looking for a bad credit, guaranteed, or no credit check car loan. These loans are still not desirable and will have high rates and harsh penalties, but they may still be better than bankruptcy loans. To improve your chances of being approved for these types of loans, look to tip number 2.

Tip 2: Finance as Little as Possible

When you have a bankruptcy on your record, lenders are going to be hesitant to provide you with a lot of money since you are a high risk prospect. Because of this, you should finance absolutely as little as you can, even if that means getting a car that is merely functional. The other advantage of financing a small amount is that you will end up paying much less interest monies in the long run, as you will be paying interest on a lesser amount and you will be able to repay the loan more quickly.

Tip 3: Use the Internet, Cautiously

A lot of traditional lenders, like auto dealers and local banks and credit unions, will flat out deny bankruptcy loans. Someone who’s declared bankruptcy is often considered simply too high risk, and understandably, lenders don’t want to take the gamble. Fortunately for the bankrupt, the Internet is a great source of help since it allows you to connect with lenders all over the United States, many of which specifically deal in bankruptcy loans. Use the Internet to help put you in touch with lenders that provide loans to even the highest risk prospects. Make sure you check customer reviews for any online lender you consider using before providing personal information.

Tip 4: Don’t be Intimidated by the Past

Bankruptcies stay on your credit record for 7 years, which is plenty of time for someone to get their finances under control and be fiscally responsible. If you have a bankruptcy still on your record, but have always made your payments since then, look for lenders which will allow you to meet in person and explain your situation. A bankruptcy may still be on your record after, say, 5 years, but if that 5 years has shown a consistent trend of making all your payments, lenders will realize that you’ve changed your formerly poor financial situation.

Getting auto loans after bankruptcy can be tough, but by following these 4 tips, you will be most easily able to find a loan that works for your current situation.