No matter which type of bankruptcy you file, it’s never easy having to go through one. A Chapter 7 means there’s a chance you could lose your home or car, and a Chapter 13 means it’s going to take years to complete. If you need to finance a vehicle with a bankruptcy, you usually need to work with the right type of dealership or lender since your credit score drops. Auto Credit Express can help you find the right car dealers who deal with bankruptcies near you.
Option 1: Your Current Lender
If you reaffirmed on your auto loan during the bankruptcy and you weren’t delinquent up until that moment, the first place you should look for financing is with your current lender.
It’s not a guarantee, but they may accept you – and you may receive a better interest rate compared to a special finance or buy here pay here dealership. Keep in mind this is a viable option if you reaffirmed on the loan. If you didn’t, then you need to head to a different lender or dealer to get financing.
Option 2: Buy Here Pay Here Dealerships
The easiest type of dealership you could work with is a buy here pay here (BHPH) dealer. What makes these dealerships unique is that they’re also lenders, so you don’t have to worry about any third-party loan providers.
This one-stop shop makes buying a financing a vehicle easy, plus many of these dealers don't check your credit. They're not concerned with whether or not you have a bankruptcy listed on your credit reports.
Instead of relying on your credit, they look to your income to determine approval. As long as you have the income, you should be able to finance a car. Additionally, these dealerships usually require a down payment. How much money down is required typically depends on the price of the vehicle you finance.
You sometimes don’t get to improve your credit score with one of these car loans. It depends on whether the dealer reports loans or timely payments to the credit bureaus. If credit repair is a top priority, check with the dealership about their reporting practices before you finalize a purchase. Also, keep in mind that your interest rate is going to be higher than average, and these lots only carry used vehicles.
Option 3: Special Finance Dealerships
The next, and best, option for those looking for a lender that deals with bankruptcy are special finance dealers. These dealerships work with subprime lenders that know how to handle bad credit situations.
Subprime lenders do check credit, but also consider outside factors such as your income, residence, and down payment to qualify you. To read up about subprime auto loan requirements, click here.
You get a chance to improve your credit with a subprime car loan since these lenders report loans and on-time payments to the credit bureaus, but, just like BHPH dealers, you can expect a higher than average interest rate.
As for the down payment, subprime lenders generally require $1,000 or 10 percent of the vehicle’s selling price, whichever is less. Keep in mind that this is only the typical requirement, and specifics can vary by lender.
Find Car Dealers Who Deal with Bankruptcy Near You
Now that you know what types of dealerships you should be working with during bankruptcy, are you ready to get connected to one in your area? If so, Auto Credit Express is here when you’re ready.
Our service helps consumers find financing by connecting them to dealers near them that know how to work with unique credit situations like bankruptcy. To get started, fill out our free, no-obligation auto loan request form and we’ll get right to work for you!