Auto Financing After Bankruptcy
With tough economic times many people are declaring Chapter 7 and Chapter 13 bankruptcy. One downside to declaring bankruptcy is the long and complicate battle to restore your credit. Obtaining and responsibly paying on a car loan is one way to rebuild your credit history. Obtaining auto financing after bankruptcy is not as easy as obtaining financing with perfect credit, but it is possible and can go a long way in helping to fix your credit. Before you try to obtain auto financing check out these tips to make the process easier on your wallet.
Before you start looking for a car loan check your credit report and make sure it is accurate. You should make sure that it is up to date as changes from declaring bankruptcy can take time to go into effect, anywhere form a few weeks to a few months depending on lenders. It is not uncommon for accounts to remain open in error as well, so be sure that your credit report is accurate and up to date. If you do find errors contact the account holders directly.
Before purchasing a vehicle you should also decide exactly how much you can afford. Going in to the car buying process with a set limit makes it less likely that you will be talked into spending more than you can afford. Choose a maximum monthly payment as well as a maximum total price that works out to your monthly payment amount over a set number of years.
You may have to go with a car loan lender that specializes in auto loans or bad credit loans. Car loan lenders often work with several financing partners to secure loan for people with varying credit risks and will often work with people who have had bankruptcies. You can find car loan lenders online at sites such as AutoFinancing.net .
All loan applications will ask you if you have ever declared bankruptcy and will allow you to explain why. It is important to disclose why you declared bankruptcy, especially if it was because of extenuating circumstances or a situation out of your control. Many lenders are more willing to work with people who have declared bankruptcy for these reasons so it is important to disclose them.
Once you have obtained bankruptcy auto financing always stay on the look out for an opportunity to refinance for a lower rate. Once you have shown a stable payment history and your credit has improved you will probably qualify for a lower rate.