Your credit score drops after a bankruptcy, but a lower credit score doesn’t always have to stop you when you need a car loan. Post-bankruptcy auto loans in Philadelphia are out there, and we can show you where to get one.
Post-Bankruptcy Credit Concerns
Both Chapter 7 and Chapter 13 bankruptcies can leave you with a blank slate as far as debt goes. This can make it much easier to get approved for a car loan, assuming your bankruptcy was discharged.
However, filing any type of bankruptcy in Philadelphia leaves you with a lower credit score, as well as a bankruptcy listing on your credit reports. Like other types of negative accounts, a bankruptcy remains on your credit reports for either seven or 10 years, depending on which type you filed.
Even though your credit score suffers following a bankruptcy, the debt-free clean slate helps. Still, it may be difficult to find an auto loan through traditional means, such as a direct lender, bank, credit union, or new car dealer.
What you need is a lender in Philly that’s prepared to deal with post-bankruptcy issues, and you won’t find them at every dealership.
Special Finance Car Dealerships
Bankruptcy auto loans in Philadelphia often require a subprime lender. These lenders specialize in car loans for people in unique credit situations. Not every dealer works with this type of lender, however. They’re only found through special finance dealerships.
When you work with a subprime lender, you’re required to provide proof of many items listed on your loan application. This may seem like a hassle, but lenders don’t want you to risk further credit damage by taking on a loan you can’t truly afford.
The conditions vary by lender, but in general, you’re required to provide proof of:
- Residence – Lenders need to know where their vehicle is going to be kept. Bring in a current utility bill in your name with the address listed on the application in order to prove your residence.
- Income – You can’t get approved for an auto loan if you can’t afford it. Believe it or not, lenders don’t want you to go broke making payments on a car. Subprime lenders usually require a minimum income of around $1,500 to $2,000 a month before taxes from a single job. Bring in a recent computerized paycheck stub that shows your year-to-date earnings in order to prove it.
- Employment – Subprime lenders typically require at least six months to one year of employment at your current job (Social Security and Disability income generally aren't accepted). These lenders are also looking for a three-year employment history without any major gaps between jobs.
Buy Here Pay Here Dealerships
If you can’t get a loan through a subprime lender, you have another option in the City of Brotherly Love: buy here pay here (BHPH) dealers. A BHPH dealership is a convenient one-stop shopping experience, as they're both a dealer and a lender.
BHPH dealerships are a type of in-house financing dealer. They usually don’t care where your income comes from, or even what your credit score is. They’re more concerned with whether or not you can afford to make the payments.
Whether you use a subprime lender or go through a BHPH dealership, you typically need to make a down payment. A subprime lender generally requires a down payment of at least $1,000 or 10% of the vehicle’s selling price, whichever is less. Meanwhile, a BHPH dealer usually bases the down payment requirement on the price of the car you finance, so it varies more widely.
Post-Bankruptcy Auto Loans in Philadelphia
Now that you know what it takes to get a post-bankruptcy auto loan in Philadelphia, you need to know where you can find a lender that can help.
At Auto Credit Express, we work with a nationwide network of special finance dealerships, including bankruptcy financing dealers in and around Philly, and we want to get you connected to one near you.
Fill out our fast and free car loan request form, and we can point you in the right direction. Don’t hesitate any longer to get the post-bankruptcy auto loan you need – get started right now!