If you recently filed bankruptcy, you’re not alone. Roughly 1 out of 200 Americans files for bankruptcy each year. For many people, filing for bankruptcy is the best solution to get back on track. Bankruptcy can erase most debts from your credit report and can give you a new financial start.
You may wonder if bankruptcy will affect your ability to obtain a car loan. The answer is not necessarily. While credit scores are important for all financial transactions, including auto loans, a bankruptcy filing doesn’t automatically ban you from getting a car loan after bankruptcy. Here are tips on how to get a car loan after bankruptcy.
Have your Credit Checked
Do not wait until after you buy a car to have your credit checked. The bank will pre-qualify you for the loan, ensuring that what you are buying is affordable and within your pre-approved terms.
You can then go out and choose the car that best suits your needs. As long as you have good credit, it should be easy to pre-qualify for a car loan, even with a bankruptcy on your record.
Pick a Bankruptcy Chapter
Not all bankruptcy filings are equal. There are several different types of bankruptcies. You should know the differences between them before choosing which chapter to file. For example, filing under Chapter 7 will usually stay on your credit report for ten years, while filing under Chapter 13 will usually come off of your credit report in 5 years.
You can pre qualify auto refinance after bankruptcy even if you have bad credit to meet the minimum requirements to pre-qualify for a car loan. However, it is important that you pre-qualify for a car loan after bankruptcy before shopping for cars so that you can choose the best financial terms for your new car.
Look for Lenders for Approval
The pre-qualification process is used to pre-verify your ability to qualify for a car loan. Once pre-qualified, you can then look for lenders who will approve you for the car loan that’s right for you, with the best interest rates and low pre-qualification requirements.
Pick Out Your Vehicle Carefully
Once you know the vehicle you want to purchase, take some time to go over all the different available options. Does the vehicle have a warranty? How long is it? Is there a pre-owned vehicle that fits within your price range and pre-approved amount from a dealer or private sale?
Once you know for sure what kind of car you want, visit a few different dealerships to get an idea of what they have in stock.
Shop Around For a Deal
Now that you have pre-qualified for a car loan after bankruptcy, you owe it to yourself to shop around. Shop from private parties as well as dealerships to find the best deals on used cars.
If you have recently filed bankruptcy, don’t be discouraged from pre-qualifying for a car loan. According to Lantern by SoFi, “Pre-approved rates are the best way to prequalify for a car loan.” Most importantly, pre-qualifying saves you time and money because you know that a pre qualified loan is a realistic option from the beginning of your car purchase journey.
