Getting a car loan after bankruptcy is a smart choice. At this point, you need to rebuild your credit. That is not a secret. One of the best ways to do that is to get financing immediately.
Should you wait for a while after filing?
Obviously, your interest rate will go down if you do. However, if your car was repossessed during the bankruptcy, you obviously need a vehicle now. In addition, do not forget that the sooner you get financing, the sooner you start rebuilding your credit.
How much will the interest rate be?
It obviously will be higher than for most people. However, when you take some precautionary steps, you can still ensure yourself a reasonable rate.
What qualifications need to be met?
In most instances, you have to be completely discharged of bankruptcy. In addition, every company will require that you proof you can repay the loan. To do this, they will ask you for your income. However, assuming you meet the qualifications to be accepted, here are three tips to get you the best rate:
1) Use the internet
Many broker sites will return you ten to fifteen quotes within a minute after filling out the application. These sites will probably be your best option. In many instances, going to a car dealer is not possible. They tend to be a little pickier about who they accept. That is not to say you should not try.
When the car economy is slower, they are more lenient about who they give a loan to. The same goes for the banks. However, if you have been denied at your bank and the dealer, than the internet is your best option. There are all kinds of subprime financing companies online who focus on dealing with those with bad credit.
2) Focus on the interest rate
Make sure you do not pay attention exclusively to the monthly bankruptcy car payment. In some instances, the payments for one company will be lower than another. However, the total amount you pay will be higher. In that case, you should probably go with the company with the lower total amount. This way you can also pay it off quicker. However, be sure you can make the monthly payments comfortably. If you cannot, you might have to go with the company with the best monthly amount.
3) Read the small print.
In many cases, there are hidden late fees that really raise the amount you pay substantially. Often times, companies hide these fees. Then you do not find out about them until it is too late. These firms are known as “loan sharks”. The best way to find them out is to first read customer reviews about any company before doing business with them. This will save you a lot of headaches down the road.
What if you do not need a car immediately?
Then it might be wise to wait awhile to get the loan. The interest rate will be much better.
So what you can do to raise your credit score in the meantime?
Simply get a secured credit card. This will help you build your credit back up. Just make sure you make each payment on time.
What is a secured card?
It works like this: if you want a $2000 limit on the card, you have to likewise put $2000 in your bank account. This gives the company recourse if you do not pay them.
How long will it take to get back to a decent score?
It could take as much as 24 months. The important thing is that you are patient, and stay consistent in making your payments on time. However, if you need a car loan after bankruptcy immediately, then follow the three above tips and you will still get a decent rate.
Financing