Getting an Auto Loan after Bankruptcy [Auto Loans]
November 25, 2007, 12:00:22

You may think that bankruptcy means the end of your financial or economic life. It is an unfortunate event nonetheless, but there are ways for you to get back on track. For example, filing bankruptcy does not mean automatically you cannot obtain a car loan anymore. Most lenders are flexible enough to understand the reasons for which you have filled bankruptcy and they can still get you your desired loan. You will need to follow some procedures. First of all, you need to file a consumer statement with each of the credit bureaus. Because sometimes things out of your complete control can lead to bankruptcy, be sure to add this consumer statement to your credit report at each of the main credit reporting agencies (Experian, Equifax, and TransUnion). You need to do this in order to explain the reasons for which you have filed bankruptcy (these reasons out of your control may include a serious illness, the death of a family member, loosing your business because a partner has run away with the capital assets, etc).

You should follow the following tips to get approved with the best rates for your car loan.

First of all, review your credit report. After a bankruptcy, it is not uncommon that you may find some open accounts that should be closed. Such an account can damage your credit score and that is why it is important to make sure all your accounts are in order.

It is advisable to add a page to your credit report in which to explain the reasons for the bankruptcy. Loaners may give you a better loan than under normal circumstances if there had been extenuating circumstances.

It is recommended to carefully think how much you can spend each month for returning the car loan. If you plan your car purchase thoroughly, you can know which auto financing package suits you best.

You should consult a car loan lender. They will find you a loan and because they work with different financing institutions to back loans with all types of risk, they can give loans after you have suffered bankruptcy. You can use an online car loan lender, as they can find you a better deal because they work with thousands of loans. When your loan is approved, the online car loan lender will send you a check At this point you are a pre-approved car loan buyer.

It is important to explain in the car loan application the exact reasons which led to bankruptcy and what measures you are planning to take to get out of this situation.
If your financial situation has witnessed any improvements, be sure to include them.

You should not let out of your sight the possibility of refinancing the loan. You can obtain lower interest rates after a year or so if you pay your bills on time. It can take you as low as three years to obtain a very good credit score and obtain even lower interest rates.

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