Although there are splotches your credit report, you can get a car loan after bankruptcy. You just need to work harder before you can get behind the wheel.
Before you visit a dealership or a car-buying website, do some repair work on yourself. Bankruptcy often diminishes one’s sense of self-worth, and that’s a bad mindset when negotiating with a sales rep. So, give yourself a pep talk. Think about the positives, like your job and your willingness to get a fresh start on your life.
Why is this important? If you need to get a car loan after bankruptcy, you should know that there are lenders who will slap onerous terms on the money you borrow, often demanding extremely high interest rates even if you make a decent down payment on the car you buy.
Because it is more difficult to get car loans during and after bankruptcy, many people forlornly accept bad deals. Don’t do it.
Avoid Predatory Dealers
You should also steer clear of car dealers who offer subprime loans and buy-here, pay-here financing agreements. They often charge extremely high interest rates, demanding payments that can ruin your finances. What’s more, you likely will end up buying a junker, since these dealers have experience exploiting desperation and will sell you the worst car on their lot. Car dealers in this category are predatory lenders dressed up as car dealers and you should avoid them.
Get Pre-approved before Car Shopping
The smartest move would be to go to your bank or credit union and seek pre-approval for a car loan. They may surprise you and present conditions and interest rates that make the car-buying experience much easier, or they may show you loan terms that you know you can’t possibly afford.
That would be a sign that you need to find some other form of transportation while you rebuild your credit.