Filing for bankruptcy is tough, there’s no doubt about that. When facing bankruptcy or even after filing, it is difficult to imagine ever obtaining a loan for anything in the near future. This can be scary because it’s inevitable that you will eventually need financing for necessities like your next vehicle. However, bankruptcy is not the end of your life. And if you’re wondering how to buy a car after bankruptcy, read on for some helpful tips during this time. Your credit will be affected but it will not be ruined forever. Buying a new vehicle is possible and may even be an important step in helping to re-build your credit following bankruptcy.
Wait for your discharge
Even if your bankruptcy case isn’t quite over with yet, you may still be able to get financing. However, make sure the courts have filed an order of discharge. This will allow your dischargeable debts to be zeroed out on your credit report.
When seeking an auto loan, be sure to explain your situation. Remember, you’re not the only one who has ever had to file for bankruptcy. Some lenders even specialize in helping customers with credit challenges obtain auto loans.
Consider getting a co-signer
You can usually get better financing for your loan with a co-signer. This decreases the risk to the lender should you default on your loan. It is a big responsibility since the co-signer will then assume responsibility for the loan. However, you should still ask a trusted family member or friend to consider co-signing for you. They might be more willing than you might think to help you out.
The best buys are usually used vehicles of late-model years. They are less expensive than buying brand new and won’t require as much maintenance or upkeep as older used vehicles. Remember, the less expensive the car is, the less financing you will need. This will increase your chances of being approved for an auto loan.
Re-establish your credit
In order to rebuild your credit, it is critical that you make your car payments on time. This will increase your credit score which will net you cheaper loan rates in the future.
Refinance your auto loan
As your credit score improves, the rates of your car loan will eventually decrease. The decrease might even get as low as half of your present loan rate. This is why you should refinance your loan after six to twelve months.