Post-Bankruptcy Auto Financing Tips: Time your Car Loan the Right Way
Post-bankruptcy, we often wonder if we will be able to purchase a car or not? The answer to this question is yes. A car is essential to buy groceries, go to work, and run errands. Getting a car loan after bankruptcy is possible. But it would help if you got the timing right. And, before you think of securing an auto loan after bankruptcy, you must learn about your situation in detail.
What is the Right Time to Get an Auto Loan after declaring Bankruptcy?
1. Chapter 7 Bankruptcy
If you declare yourself bankrupt under chapter 7, you will be able to discharge the bankruptcy within six months. The liquidation bankruptcy process includes selling off your existing assets and paying off the debt. Once you get your discharge letter, you can apply for a car loan. However, the impact of chapter 7 bankruptcy stays on your credit report for ten years. Hence, you should find a subprime lender to get easy loan approval.
2. Chapter 13 Bankruptcy
In chapter 13 bankruptcy, a payment schedule is prepared and approved by creditors. The payment plan for the reorganization bankruptcy is usually for 3-5 years. You can either wait for the payment period to get over or decide to secure an auto loan in between the period. In the latter case, you will have to get the court's approval.
Ideally, it is best to wait for the bankruptcy to get over before applying for an auto loan. This way, the lenders will be able to ascertain your financial situation in a better way and provide the best possible interest rates. However, if you need a car, ask your spouse or children to buy a car in their name and add yourself as a registered driver for the vehicle.
Quick Tips for Getting an Auto Loan Post-Bankruptcy
- Reduce the Car Cost: It is better to decide the budget of the car in advance. If your credit score is bad, buying a used car with fewer advanced features is a good option for you. It will cut down your cost and thus, improve your approval chances.
- Find a Co-Signer: Get yourself a co-signer who can provide a guarantee to the lender. They can be any person who agrees to pay off the loan on your behalf and provides you with the credibility to build up a trust in front of lenders.
- Improve your Credit Score: Any bankruptcy will negatively affect your credit score. But you have to ensure that there are no errors on your credit report and the numbers reflect your current financial situation.
- Arrange for Down Payment: It builds your credibility when auto lenders see that you can make a down payment. Hence, spending at least 20% or more of your car cost is always advisable as a down payment.
- Apply for Pre-Approved Auto Loans: Before going to a car dealer, shop around for lenders who approve bad credit auto loans for people with a past bankruptcy. You can also check with your local bank and credit union. However, your chances of pre-approval are significantly higher with online auto financing companies that work exclusively with subprime lenders.
Whether you dealt with Chapter 7 or Chapter 13 bankruptcy, it takes a toll on your financial condition and affects your approval chances. But the right timing and helpful car financing tips will make buying a car easy.
FastAutoLoanApproval.com is America's best subprime lender for auto loans post-bankruptcy. Apply online to get pre-approved car financing within two business days.
:- Posted by Admin on 7th June, 2022