If you have been through bankruptcy, it may seem like you will never shake the financial stigma. Will you ever be able to get decent loan rates again? Yes, good interest rates are possible after bankruptcy, but three factors will affect how quickly you will qualify for them. 1) What led to the bankruptcy? 2) How long as it been since the bankruptcy was discharged? 3) How has your payment behavior been since the discharge?
An Isolated Event
- What Happened: If you maintained a good payment history, but then experienced a catastrophic event that led to a bankruptcy (difficult divorce, the collapse of a small business, a large and sudden medical bill), this will be judged differently than habitual late payments and multiple charge-offs leading to a filing.
- Since Then: If, after being discharged from your bankruptcy, you have gone right back to being prompt and timely with your bills, your credit score has probably started to recover. And even though it may take up to 10 years for the bankruptcy to fall off of your credit report, a year or two of good credit behavior will go a long way in the eyes of lenders. Your credit may still be "bad," but if you're applying for an auto loan, you may easily fall into the "good-bad" category and qualify for interest rates that are similar to those that are extended to good credit buyers.
A Series of Events
- What Happened: If, on the other hand, you had to file for bankruptcy because you built up a lot of debt over time, were perpetually late with payments, and perhaps had accounts that went into collections, it will take longer to gain the trust of lenders.
- Since Then: There can still be a limit to how long your financial mistakes from the past can haunt your future, but you have to be willing to put forth some effort and be patient. If you have changed your payment habits, and you're trying to improve your credit, don't get discouraged. While your credit might still be judged as "bad-bad" a year or two out of your bankruptcy, and you will be paying higher interest rates for a while, this won't last forever. After a few years have passed, the bankruptcy will disappear from your credit report, and your prompt and timely payments will eventually lead to better loan rates.
Helping the Process Along
If you have recently emerged from a bankruptcy and are in need of reliable transportation, Auto Credit Express can help you to get approved for an auto loan that will also benefit your credit standing.
It's a win-win. You will be back on the road, and on your way towards better finances ahead. And our process is simple. Just fill out our fast and secure online application to get started today.