Going through bankruptcy is never easy. You may lose assets such as your car or home, or end up repaying your debts for years. Things happen, and sometimes you need an auto loan while you’re in the middle of a bankruptcy. Luckily, there are dealers across the greater Los Angeles area that specialize in helping bad credit car buyers get financed.
Dealerships That Offer Bankruptcy Car Loans in LA
Before you head to a dealership in Los Angeles to start the financing process, you need to obtain a sample buyer’s order from the dealer then get the court’s approval. Without that, you can’t get a bankruptcy auto loan, and are breaking the law if you do.
If you manage to get an order to incur additional debt from the court, your next step is to go back to the dealership and continue the financing process. If you’re just starting and aren’t sure what type of dealer to go to in Los Angeles, there are two different types of dealerships you could work with to get a bankruptcy car loan:
Special finance dealers – Special finance dealerships work with subprime lenders who know how to handle various bad credit situations and can work with borrowers dealing with bankruptcy. Subprime lenders look at your credit score, but also rely on other factors to determine approval. Each lender has different requirements, but they generally look at your income, employment, residence, and down payment to qualify you – some subprime lenders even require you to have a cosigner. What makes a subprime lender great is that with this type of loan, you can improve your credit over time by making all of the payments on time.
Buy here pay here dealers – Buy here pay here dealerships, sometimes called tote the note dealers, also offer bankruptcy auto financing. What makes these dealerships different is that they’re also the lenders – there’s no third-party bank or finance company you have to work with, which means you can sign and drive all in the same place. In addition, these dealers typically don't check your credit, so you could be in an open bankruptcy and get approved for financing. To qualify you, these dealerships look at your income and down payment. As long as you have the income, it doesn’t matter what’s on your credit reports. Sure, it’s easier to get approved for a buy here pay here car loan, but they may not report loans or timely payments to the credit bureaus if they don't run credit checks. If this is the case, you can’t improve your credit with one of these auto loans.
To read up on tips to getting a bankruptcy car loan, click here.
The Best Time to Get a Bankruptcy Car Loan
Ideally, the best time to get a bankruptcy auto loan is after the bankruptcy has been discharged. It’s much more difficult, and sometimes impossible, to get a car loan when you have an open bankruptcy. Ultimately, it depends on the type of bankruptcy you file.
If you filed a Chapter 7 bankruptcy, you usually need to wait until it’s been discharged before you can get approved. A Chapter 7 only lasts a few months, and lenders don’t like to see that you have an open one. If you filed a Chapter 13, you have a greater chance of getting approved for an auto loan while it’s still open. Subprime lenders understand that it takes years to complete a Chapter 13, and that things can happen during that time that cause you to need a vehicle.
At the end of the day, make sure you discuss the possibility of getting a bankruptcy car loan with your trustee first. They can tell you whether or not it’s a good idea, and what steps you need to take in order to finance a vehicle.
Need Help Locating a Dealership?
If you’re ready to get a bankruptcy auto loan, but don’t want to drive around Los Angeles looking for a dealership, we’ve got you covered.
At Auto Credit Express, we’ve been helping credit-challenged car buyers find financing for over 20 years by connecting them to local dealers. Getting started is simple. Just fill out our free and quick auto loan request form, and we’ll get right to work connecting you to a dealership near you!