If you’re in the middle of a bankruptcy or recently had one discharged, where can you go in Seattle to get a car loan? There are many dealerships located in and around The Emerald City, but not all of them offer bankruptcy auto financing.
Types of Dealerships that Handle Bankruptcy Auto Financing
Before you head to a dealership, if the bankruptcy hasn’t been discharged, you need to inform your trustee of what you want to do. You can’t just go to any dealer and get a bankruptcy car loan, you a need the court’s approval and, before that, a sample buyer’s order from the dealership where you plan to finance the vehicle.
When you’re dealing with a Chapter 7 or Chapter 13 bankruptcy, either open or closed, it’s important you know the types of lenders and dealers you should be working with if you want auto financing in Seattle:
Special finance dealerships – These dealerships work with subprime lenders that specialize in helping credit-challenged consumers get financed. Subprime lenders check your credit score and reports, but they base approval on additional factors such as your income, employment, residence stability, and down payment.
Buy here pay here (BHPH) dealerships – BHPH dealerships lend in-house, which means you can get a car and a loan all in one place. Most of these dealers don’t run credit checks, so they aren’t concerned about whether or not you have a bankruptcy listed on your credit reports. As long as you have the income and down payment to qualify for an auto loan, you shouldn’t run into issues getting approved. Just be aware that your vehicle options are typically limited with BHPH dealerships. So, make sure you have a mechanic inspect any car before you buy it.
Regardless of whether you finance through a subprime lender or BHPH dealer, you can expect your interest rate to be well above average – usually in the double-digits – along with a down payment requirement of $1,000, to 10 percent of the vehicle’s selling price, whichever is less.
5 Steps to Take to Get a Bankruptcy Car Loan
Now that you know the difference between a special finance and a BHPH dealership, how do you go about getting a bankruptcy auto loan? If you’re not sure where to start, here are five steps you should take to get the car loan you need:
- Check your credit – Know where your credit score stands, and what’s on your credit reports. You're going to want to check your FICO credit score, as this is one that auto lenders use most. Check to see if your lending institution or credit card provider offers a free FICO credit score check. If they don't, you may need to pay a small fee with the credit bureaus (Experian, TransUnion, and Equifax) or FICO directly at www.myFICO.com. Meanwhile, you’re entitled to a free copy of your credit reports every 12 months from the three major credit bureaus that you can request at www.annualcreditreport.com.
- Budget and calculate – While considering your monthly income and expenses, you can use online tools such as our Car Loan Estimator and Payment Calculator to get a better idea for how much car you could afford.
- Research vehicles – Make sure you pick a car that fits your current needs and budget. Make sure you look up features, fuel economy, safety ratings from IIHS and NHTSA, and reviews from experts and previous owners to get an idea for what you’re getting.
- Research interest rates – You should also research interest rates, and see the APR people with similar credit scores are getting so you have a better idea of the interest rate you may qualify for.
- Get the court’s approval (if bankruptcy is open) – If your bankruptcy is open, you need to get a sample buyer’s order and the court’s approval before you can proceed to finance a vehicle. To read up about the car buying process with an open bankruptcy, click here.
Need Help Finding a Car Loan in Seattle?
No matter if you live near Northgate, Georgetown, or anywhere else, Auto Credit Express wants to help you find a dealership that can work with you. For 20 years, we’ve been helping people in Seattle and across the US get connected to dealers near them that have the lending resources available to handle many types of credit situations, even bankruptcy.
Getting started is easy, just fill out our simple auto loan request form, and we’ll get right to work connecting you to a dealership!