Finding a bankruptcy auto loan may not be easy, but there are plenty of lenders who will give you a car loan. You may have to search them out but it can be well worth your time.
You will have to pay a higher interest rate for the loan right now. However, once your re-establish your credit you can usually refinance for better terms and a lower rate of interest. Don't get upset over the rate, it is what it is.
If you can wait awhile for you car, it's best to start re-establishing your credit before you go shopping for a loan.
Three Steps For Finding A Bankruptcy Auto Loan
Budgeting Your Finances
The more money you can put down, the better chance you have to get the lender to say yes to your auto loan. Go over your finances and see what you can comfortably afford every month for a car payment and the maintenance of it. This will help you shop within your means so you don't end up in financial trouble again. You don't want to buy something today that you can't afford in the future due to poor planning and the lack of budgeting.
Loan-To-Value Ratio
Most people don't understand how a lender evaluates how much money they will lend on a specific car. Your overall credit history and your income will play a major factor in the percentage of money you can borrow (your-loan-to-value-ratio).
Good credit borrowers can usually borrow up to 120 percent of the price of the vehicle. People with bad credit may only get a 60 percent loan-to-value-ratio, thus having to put more cash down to get their car. All lenders are different as to their approval guidelines and rules.
Applying For A Loan and Subprime Financing
Working with a larger dealer who has access to many lenders can be to your advantage. The dealer will send your loan application out to several lenders and see if someone will extend you a loan. If you have a vehicle financed that you did not include in the bankruptcy, it may be a good idea to go back to that lender and see if they would give you a loan. Providing your have made your payments on time.
If you can't get traditional financing then you may have to look at a subprime lender. These are lenders who have programs custom made for a bankruptcy car loan. It may end up as your only source for a car loan if everyone else turns you down.
