Auto Loan After Bankruptcy: 3 Tips For Approval

An auto loan after bankruptcy is just the right choice if you need a car after you have filed for bankruptcy. True, a bankruptcy can put a big question mark on your credit rating. Nevertheless, you will need some form of personal transportation to help you get back on your feet. Besides, you cannot last seven years, which is the typical length of time that a bankruptcy record lasts on your credit rating, without a car. Bankruptcy auto loans are there to help you purchase a new car even if you are still in the process of reorganizing your business or personal finance.

Here are 3 tips that can speed up the approval of this type of auto loan.

Tip 1 – Choose the Most Affordable Car that Suits You

An auto loan after bankruptcy can come at very high interest rates. For this type of loan, it is not uncommon to see interest rates that are in the range of 15% to 19%. Therefore, it is not a good idea to choose an expensive car. Always think practicality when you are applying for a bankruptcy car loan. You do not need to take out a huge loan and suffer the steep interest charges.

But if you really want an expensive model, you can wait until you have effectively improved your credit rating. By then you will be able to get lower interest rates that will allow you to take out a bigger loan and buy a pricier car.

Tip 2 – Reestablish Good Credit Rating

Getting approved for a bankruptcy car loan can take several months or even years. To speed up the whole process, you can start rebuilding your credit rating. By doing so, banks or any other type of lender would be willing to grant your loan. If you have any outstanding debts, make sure to pay them on time for at least two years, and you will definitely get a higher credit score. An auto loan after bankruptcy is, in itself, a good way for you to improve your credit rating.

Tip 3 – Choose from Among Several Lenders and Loan Packages

If you plan to get a bankruptcy auto loan, don’t just consider one lender. It will be more advantageous for you if you shop around for more loan packages and then get the best one being offered. It is also important to note that there are many lenders who will not even require your credit report. Instead, they will just ask you to state your credit rating.

Always remember, even if you have filed for bankruptcy, you can still apply for an auto loan. Many lenders and financial institutions come up with special packages that help people who have filed for bankruptcy get a new vehicle. After all, this type of loan is easier to finance since the vehicle itself will act as the collateral.

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