It usually feels great after you’re discharged from a bankruptcy. However, the scars left on your credit reports? Not so great. Here’s what you need to know to navigate your first car loan post-bankruptcy.

Can I Get a Car Loan Right After Bankruptcy?

Your First Post-Bankruptcy Auto LoanOnce you’ve been discharged from bankruptcy, you can usually get into an auto loan rather quickly.

If you apply for a car loan immediately after your bankruptcy is completed, your discharge may not be on your credit reports just yet, and it can take a month or two for it to appear.

To prove that you’ve been discharged, simply have your discharge papers handy to show the auto lender that you’re in the clear and able to take on new credit.

What Kinds of Lenders Work With Post-Bankruptcy Borrowers?

There’s a type of car lender, called subprime lenders, that commonly works with bankruptcy borrowers and those with situational bad credit. They’re indirect, third-party lenders that are signed up with special finance dealerships.

Direct auto lenders – like credit unions and banks – are more likely to have higher credit score requirements that bankruptcy borrowers can struggle to meet. For a higher chance of getting a car loan approval, borrowers who were just discharged from bankruptcy can consider a subprime auto loan.

Both direct and subprime lenders report car loans to the credit bureaus, which means an opportunity for credit repair post-bankruptcy.

Bankruptcy Auto Loans and Credit Repair

After bankruptcy, you may have watched in horror as your credit score plummeted. However, this is normal for many bankruptcy borrowers. Just know that credit scores aren’t set in stone, and time (and a little bit of work on your part) heals them.

If you get an auto loan after bankruptcy with a lender that reports it to the major credit bureaus, then your on-time payments can rebuild your credit score after bankruptcy.

The good news is that the majority of your credit score is based on your payment history. Yes, bankruptcy can damage your credit, but credit scoring models are usually more concerned with your ability to repay loans and your payment history on your previous and current accounts. If you have a good overall repayment history, or you’ve completed a car loan in the past, it looks better on you as a borrower and raises your credit score.

Your bankruptcy isn’t going to be listed on your credit reports forever, either.

Borrowers who filed for Chapter 7 bankruptcy can have their bankruptcy listed on their reports for up to 10 years. If you filed for Chapter 13, the bankruptcy is removed from your credit reports seven years from the date you filed. Nearly every other negative mark on your credit reports is gone after seven years, too, and their impact lessens after each passing year until it goes away.

What’s on Your Credit Reports?

Before you head out and apply for an auto loan, review your credit reports. Take a moment to see what car lenders see.

Make sure your credit reports are saying the right things about you, too. Look for inaccurate dates, check your past addresses, and review past accounts. Make sure that your bankruptcy is being reported correctly, too.

If you find any mistakes on your credit reports, you can dispute it and have the error fixed. Disputing an error can usually be done completely online with the major credit reporting agencies.

You’re allowed one free copy of your credit reports from each of the major credit bureaus – TransUnion, Equifax, and Experian – once every 12 months. However, the coronavirus pandemic has caused some financial rifts, so everyone is currently allowed a free copy once a week until April 2021.

You can request your reports for free from Take advantage of the ability to review your credit weekly, since it can allow you to watch your post-bankruptcy credit repair in nearly real time.

Getting a Post-Bankruptcy Car Loan

Sometimes, people have unexpected life events that throws a wrench in their financial well-being, which can lead to bankruptcy filing. Some auto lenders can see the story in your credit reports, and look at other aspects of your life to get a better picture of you as a borrower. Subprime lenders look at more than just your credit reports.

Ready for your first car loan after bankruptcy? Then you’re in the right place. Here at Auto Credit Express, we’ve cultivated a nationwide web of dealerships that reaches coast to coast.

To get matched to a local dealer that’s signed up with the lenders you need for your post-bankruptcy auto loan, fill out our free car loan request form. We’ll look for a dealership in your area with the lending options you need after you do.