How to Shop for an Auto Loan after Bankruptcy

Auto loans after bankruptcy are essential for many people. There are many lenders that will consider you for an auto loan even after bankruptcy. By making prompt repayments of the auto loan you can build your credit history and credit rating back to good or excellent. Make sure you do your home work and you will soon come out of the bankruptcy with a good credit rating.

Getting Auto Loan after Bankruptcy

Before you go auto shopping:

  • First check your credit report and see if the information provided is accurate. Even if you have filed for bankruptcy, there might be errors in your report. Get these rectified first.
  • Next, plan ahead. You should calculate what down payment you can afford and what monthly payments you will be able to make. Once you have fixed these amounts, you will be ready to take the next step.
  • Approach at least three reputable lenders and ask them for their best rates. Take this opportunity to explain why you went bankrupt. This helps especially if there were extenuating circumstances in your case.
  • Choose the lender that offers you the best terms by way of lower down payment and interest rates.
  • Once you have fixed on a lender, negotiate to see if they will lower their interest rates for you. In any case, ask them to pre-approve the auto loan for you.
  • Once you have the loan secured, approach a dealer and choose a car that suits your needs.
  • After a couple of years, your credit rating will improve because of consistent payments. So check your credit rating and ask your lender to refinance your loan at a lower interest rate now that your credit rating is good.
  • If you have filed for bankruptcy before or there are no extenuating circumstances for the bankruptcy, you still do not need to worry. You can qualify for an auto loan if you can find a co-signer. The credit history of the co-signer needs to be good.
  • Try using a car loan lender that has good contacts with a variety of banks. They will be able to find the right match for you sooner than you can.
  • Make full use of this opportunity to rebuild your credit score.

Use this opportunity to build your credit rating back to good or excellent. Do not be so disheartened by the bankruptcy that you fail to shop around for a good deal. This can cost you a lot of money in the long term. Be sure to approach reputable institutions for your loan. Do not accept a loan higher than your pre determined amount. This way you will be more easily able to repay the loan on time and improve your credit rating quickly.

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