If you’ve filed for bankruptcy or considered this option, your credit rating is probably low. This makes it difficult to qualify for finance on a car loan. Even if you’ve managed to find some finance options that have agreed to run the numbers, they may change their mind based on what they see in your credit report.
Getting a Car Loan After Chapter 7 VS. Chapter 13 Bankruptcy
There are two kinds of bankruptcy, i.e., Chapter 7 and Chapter 13. The type of bankruptcy you file for and the amount of time since you filed could affect your ability to get a car loan.
With a chapter 7 bankruptcy, When you file for Chapter 7 bankruptcy, certain assets may be liquidated to repay outstanding debts. Certain debt can be discharged as well, and this type of bankruptcy is completed within approximately 80 – 130 days and stays on your credit reports for up to 10 years from filing.
With a chapter 13 bankruptcy, Chapter 13 bankruptcy is also known as a wage earner’s plan. It can be filed if you have a steady source of income and can pay off all or part of your debt within three to five years. The courts must approve this plan, typically paying a fixed amount to a trustee regularly – typically biweekly or monthly. You can expect the case to remain active on your credit report for seven years from filing.
While bankruptcy can be bad news for your credit scores but approved for a cheap car loan is still possible. Before applying, you’ll want to wait until after your bankruptcy is finalized.
How to Get a Car Loan After Bankruptcy
Before you go with the dealership or apply for financing, here are some things you can do to help improve your chances of getting approved for cheap car loans.
- Check Your Credit
Most people never think about their credit scores or history because they haven’t needed it before. But if you ever want to get loans of any sort, you should check your credit report often. You can pay a fee to someone who’ll do it for you or use Experian’s free CreditWorks Program. Of course, there will be other fees involved, but it may just pay off in the future when you need a loan, and your stats look better because of some services provided by them.
- Rebuild Your Credit
Once you’ve reviewed your credit reports and scores —and if you’re able to wait to buy a car—consider taking time to repair your credit if you need to. Then, as soon as possible, apply for a secured credit card, a credit-builder loan or become an authorized user on a friend or family member’s credit card to begin rebuilding your credit again.
- Shop Around
Shop around for the best auto loan offer when you want to buy. Compare rates and lon terms from different lenders to deal with your financial situation.
Getting preapproved for a car loan can help you understand what kinds of loan terms you may be approved for. Getting preapproved usually involves submitting some basic information about yourself, such as your income and credit history, but not necessarily all your transaction details. In addition, such an offer should indicate an estimated price range to help you find the best deal on a new vehicle before blood draws and fills out the paperwork!
Conclusion
After filing for bankruptcy, a person’s best bet is to wait around to rebuild their credit before applying for new loans. But if they must buy now, they should shop around and find the offer that fits their budget and needs. In addition, they must make sure to pay off their loan on time to help raise their credit score! Once your credit has improved, you may be able to Cheap cars with finance and get a better interest rate down the road.
Source URL: https://www.freedomcars.com.au/
