Consumers may not think they can get a car loan following bankruptcy but, in many cases, they can. If the bankruptcy was discharged and included any repossession, most filers can immediately qualify. The process of applying for a loan following a bankruptcy can be tedious, so it’s important to follow these steps.
Check Credit Reports and Scores
Everyone can get a free credit report every 12 months from each of the three major credit bureaus – Equifax, TransUnion, and Experian. These can be requested at www.annualcreditreport.com. Double check for any mistakes and dispute them immediately. Borrowers should also keep a copy of their discharge letter since it may not show up on their credit reports right away.
Try Local Banks or Credit Unions
Borrowers should first try to get approved through a bank or credit union, especially if they have a relationship with one. If turned down, the next step is to apply for a subprime auto loan. Subprime lenders offer bad credit auto loans and usually only lend indirectly because they require additional stipulations. Borrowers can get approved with one of these lenders by working with a dealership they’re signed up with.
Prepare a Down Payment
Subprime lenders almost always require a down payment, either in cash or trade equity. Typically, they require 10 percent of the selling price of the car or $1,000, whichever is less. In most cases, a larger down payment will increase the chances of getting approved. This will also lower the amount financed and the interest charges over the loan term.
Because not all dealers work with subprime lenders, finding one that does can be difficult. This is where Auto Credit Express can help. We're connected to a national network of experienced special finance dealers with the resources available to help a wide range of buyers.
The lenders they work with are able to assist people in many different credit situations, including bankruptcy. Let us point you in the right direction. Get started now by filling out our free online auto loan request form.