Can I Get a Car Loan After Bankruptcy?

May 19, 2008

So you have been through a bankruptcy and need a new car, but you are worried that your past financial history might keep you from getting a car loan? Relax! Yes, you can get a car loan after bankruptcy. You will need a type of loan that is called a bad credit car loan. With this type of loan, your interest rates will more than likely be higher, but you can get the loan whether you have good credit, bad credit, or even no credit at all.

Some people are able to go out right after a bankruptcy is complete and get a loan for a car. They argue that they have no choice, as they have to have something to drive. But, it’s really best for you to wait for a little while as you might find it a bit difficult to locate a lender who will give you a loan so soon after bankruptcy.

That’s not to say it can’t be done, because it can! All you need to do is look for a lender that specializes in bad credit auto loans. These kind of lenders are not bothered by people with low credit scores who apply. They are in business to lend money to people who have gone through bankruptcy, had a mortgage foreclosure, had a previous car repossessed, or just have plain old bad credit. These lenders have a special name of sub prime lenders. Whatever your credit situation is, you can usually get a car loan after bankruptcy from a sub prime lender – unless your credit score is less than 500.

If this is the case, there is a chance that even a sub prime lender will be unable to help you. You can help this situation by doing something to improve your credit. You may not know that the only way to do this after a bankruptcy is to start over with new credit cards, pay any balances promptly, and stay on the good side of your creditors. How can you get a credit card after bankruptcy, you may ask? Simple! Apply for a secured credit card. To get one of these, you must place the amount of money in a bank that offers such a card. If you want a card with a limit of $1000, then you must put $1000 in the bank. There will also be a few fees that you will have to pay.

It might take around two years for you to build your credit back up to the point where you can say you have good credit, but it will be two years well spent, and much better than the 7 years it takes for most bankruptcies to fade away.

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