It can be stressful when you are trying to purchase a car under normal financial conditions, but the process can be terrifying when trying to apply for car loans after bankruptcy. It does not matter why you decided to file for bankruptcy; you are probably embarrassed by the situation and feel as though no lender would want to approve you for a loan.
The good news is that there are some lenders who want to work with borrowers who have filed for bankruptcy. There are step by step tips that you can follow if you have filed for Chapter 13 bankruptcy. However, you will need to discuss your plans with your attorney and possibly your bankruptcy trustee before you add a new debt.
Get a Copy of Your Credit Reports
One of the first things that you will need to do to get car loans after bankruptcy is get a copy of your credit report from the major credit bureaus. You know it will probably not feel good to look at your credit score, but lenders will pull your credit. You should know what is on the reports before they do. Although the lender will probably see a different credit report than the one you see, you will still have a basic understanding of where you stand.
Pay special attention to any information about past auto loans that is on the report. These types of loans will weigh heavily on the credit report that is seen by auto lenders.
Have a Down Payment
Having a source of cash flow will be important after you file for bankruptcy. It is also good to have cash on hand as way to purchase options before you start applying for credit again. The larger your down payment is, the less of a risk you will appear to lenders. If you plan on trading in a vehicle, it can act as a total or partial down payment.
You should plan on spending a day going to different dealerships to try to get preapproved for a loan. Be sure you have all of the documents you need on hand such as payroll stubs, proof of residence, etc. You may want to limit this process to one day because you want to be mindful of the effect these inquires will have on your credit score.
Consult with a bankruptcy attorney when you want to apply for car loans after bankruptcy. The attorney will advise you so you will know how to proceed.
Schedule a free consultation with one of our experienced bankruptcy attorneys to learn more out your auto financing options after bankruptcy.