Auto Loans After Bankruptcy

Getting a car loan after filing for bankruptcy is not as impossible at it may seem. Although there are additional challenges that come with loan applications after bankruptcy, it actually has very little to do with the bankruptcy itself and more to do with how debts were handled prior. There are, however, a few considerations before applying for new credit after bankruptcy.

The Deal

Finding a good deal on credit after bankruptcy depends on what type of bankruptcy case was filed. If prior debts were resolved through a Chapter 13 repayment plan, most creditors will be willing to offer a loan fairly quick after the case is discharged. However, debtors should take adequate time to review their credit report for accuracy and save up enough money for a sufficient down payment on the car loan.

Prior debts resolved through a Chapter 7 case could mean that some creditors are hesitant to lend right away. In this situation it is important for the debtor to spend at least six months rebuilding their credit history and establishing themselves as a responsible borrower.  This means the debtor should work on obtaining one to two other sources of credit to begin demonstrating that they can be a responsible borrower who makes timely payments.