Getting an Auto Loan After Bankruptcy
If you are recently discharged from a Chapter 7 or Chapter 13 bankruptcy, you may initially believe that getting a new (or “new to you”) vehicle with any financing is out of your reach. While, naturally, getting an auto loan after bankruptcy may present a few more challenges than an A-paper borrower, it is still a viable option that you will want to approach with care.
People Need Cars
Often, particularly for those in Chapter 13, the bankruptcy terms can span from three to five years. This means that many people will need to purchase a vehicle as soon as the discharge is settled. Alternatively, possibly even earlier. While there may be a humbling aspect to negotiating terms on an auto loan after bankruptcy, you have paid your debt and still deserve a fair deal—even though you may not get the best deal. This means you will want to shop around and explore various options at the dealership and other sources. For instance, credit unions will often extend an auto loan after bankruptcy under the right conditions. Also, buy here pay here outlets can often negotiate a decent rate when called upon to do so. You do not have to settle for the first deal that is extended.
Bankruptcy is Not Uncommon
Given the current overall economic climate, as well as individual communities that have been hard hit, auto dealerships and financial institutions are becoming more and more interested in finding ways to finance an auto loan after bankruptcy. No longer is bankruptcy seen only for the irresponsible; many families have faced insurmountable hardships that were only resolved through the court safety net. To this end, establishing good credit and getting vehicle financing is beneficial in the long run.
What You Can Do
Like many things in life, time and good behavior can pay off. Getting an auto loan after bankruptcy is often one of the best things you can do to begin to rebuild your credit. First, an auto loan comes with collateral—the vehicle. This means there is a way, one way or another, to get financed. Even if you have to pay the higher interest rates, you will be on your way to improving your credit and can explore refinancing as you gain on-time payments with the loan.
Getting an auto loan after bankruptcy may be a bit more challenging, but you are in great shape, and you should look at this as a critical step in your road to economic recovery