Buying A Car after Bankruptcy – Tips and Suggestions That Can Help You Get A Set of Wheels

Although your life may have seemed like a nightmare before you filed for bankruptcy, you should know that you will face financial challenges after you file for bankruptcy also. However, your life will be easier to manage if you choose to follow your new economic recovery plan. But, you may find it more difficult if you are interested in buying a car after bankruptcy. Your credit report will have your bankruptcy listed, which can stay on your credit report for up to a decade.

This does not mean you will not be able to purchase a car; it just means that buying a car will be more complicated and stressful. Before you begin searching for a vehicle, you should work on improving your credit score. Also, you should look for lenders and car dealerships that work with bankruptcies. Many lenders will not finance a vehicle to a creditor with a bankruptcy discharge or someone with bad credit.

There are some steps that you should follow to make the process of buying a car after bankruptcy a more pleasant experience.

Apply For a Secured Credit Card

A secured credit card differs from an unsecured credit card in that the credit line equals the collateral or deposit the applicant pays. You can reestablish your credit. A creditor may also approve you for other types of credit after you have made payments on time.

Get a Co-signer

A co-signer is a second applicant on a car loan. The co-signer guarantees the lender that the buyer will pay the loan on time. Co-signers are typically individuals with very high credit scores. If you default on the loan, the co-signer will make the payments.

Prepare To Pay a Higher Rate of Interest

Creditors may approve you for a loan without a co-signer. However, you may have a higher interest rate attached to your loan. It is not uncommon for those with bankruptcies and bad credit to have an interest rate of 4% to 5% higher than applicants with good credit.

These are just a few tips and suggestions to consider when you are ready to begin the process of buying a car after bankruptcy. Having a down payment and waiting a period after bankruptcy may help you get a lower interest rate. It can also build your credit at the same time.

Need to know more about filing for bankruptcy in Georgia? Contact Douglas Jacobson for a free consultation.