• Car Loan After Bankruptcy

    Category: Auto Finance


    A car loan after bankruptcy can be one of two things. It can be a great experience as part of a plan to help you rebuild your credit and get you back to a better financial standing, or it can be a giant problem and a way into more high interest debt. Even if you’re in a situation where you’re desperate for a vehicle, you can still try and make your experience become the first one.

    Bankruptcy is supposed to be a new start. Sadly for many people after things are finalized they are left not knowing what to do next, and still in a nasty financial situation.

    Before you start looking to get a car loan after bankruptcy I recommend building up your credit a bit if possible. There are two types of credit you’re going to want to have, installment and revolving. Installment payments are for things like loans, where as revolving is for things like credit cards.

    Obviously in your situation getting a traditional unsecured credit card can be difficult. You do have the option, however, to get a secured credit card. You can usually find these at your current bank or credit union. You deposit a few hundred dollars into a savings account which will be used as security to secure your credit limit on your new card. After approximately a year you will be able to apply for an unsecured card. Make sure that the company you work with reports to the three major credit bureaus about your on time monthly payments so that you build positive credit history.

    It is recommended that you wait six months to get a car loan after bankruptcy, not just to build up your credit a bit, but because most lenders won’t work with you before then, and the ones who will, will offer you an even higher interest rate than you’d be offered if you wait a while.

    Even after six months to a year you will still be offered very high rates. This is because you are seen as a risky customer. You can try to offset this risk by offering your home, another vehicle, or high priced collectibles as collateral and you will have an easier time both finding a lender and getting a better interest rate. You can also make things easier by finding a cosigner if collateral isn’t an option for you, but you should be aware that if you fail to make your payments this person will be held responsible.

    These high rates are generally considered worth the cost, not just because you need a vehicle, but because by paying these rates now and making your payments on time every month you build up a positive credit history and will be offered better rates in the future and generally have an easier time of things financially.

    By being responsible and in control of your finances a car loan after bankruptcy can be part of a plan to get yourself back on track.

    Visit my site for more information about bankruptcy car loans and deals that offer a guaranteed car loan, and what that really means.

    Car Loan FAQ:

    Question: How would a CAR LOAN affect my HOME LOAN later?
    My wife and I have no loans on cars and no apartment (owned) yet. We want to buy a new car and finance it. How would that affect our home loans (in, say, 6 months)? Do the banks prefer you to have as little debt as possible, or would the car loan be good for our credit because we will be paying the financing on a regular basis for the next half year? We both have great credit ratings.

    Answer: Yes, it will help your credit rating but depending on your income and the amount you want to borrow to buy the house it could negatively affect your ability to get a mortgage. Don’t go in over your head on the car.

    Question: How can I assume full financial responsibility for an car loan I co-signed for without refinancing the loan?
    I co-signed for a vehicle for my son but now he wants to reduce his monthly expenses. I want to take over the payments and get him off the loan so he can go buy a cheaper car and be able to qualify for the financing. Is it possible to somehow get him off the loan without having to go through the bank and refinance?

    Answer: No. The only way to get him off the note is to refinance the car into your name. I would go to a local credit union and if you are not a member then join and they should have the lowest rates.

    Question: What are my chances of getting an car loan with 630 credit score, bankruptcy a year ago, and a repo?
    I make about $3300 monthly gross. Do I have a decent chance of getting a car loan of about $25k at a decent rate? If so, what rate should I expect?

    Answer: Now your score is not that bad for sub-prime but it’s going to depend on when the repossession happened. was it before the BK of after? If it was before then your in pretty good shape as long as it was included in you BK. If on the other hand if it was after your BK you can look forward to making a massive down payment, paying huge fees and State maximum interest rates.

    The best thing you can do is find a large dealership that advertises Special Finance and go talk to the Manager they will be able to offer you some options.

    Question: Is it possible to get car loan without my income tax papers?
    I want to get a car loan for a car that’s worth about $12,500, the problem is that I get paid cash therefore I don’t file my taxes. I get paid around 350 a week, sometimes I get paid in check, not all the time though. I have good credit, its like at 670 or so. Would it be possible for me to get a loan and where?

    Answer: You just discovered one of the downsides of illegally evading taxes. If you try to buy a house and get a mortgage, the same thing will happen. When you go to retire and have no social security or medicare you’ll discover another downside.

    Question: How long can a car loan contract be in effect for?
    The car dealership put a loan in for me to buy a car and it’s been over a month. What is up?

    Answer: Approvals for vehicle loans are only good for 30-days period. So if you have not heard back from them and it’s been longer then 30-days you were not approved for the loan. Call the Finance Manager you dealt with and ask what’s going on.

    Question: Will lowering my APR on auto loan help me pay off car sooner?
    If i would like to lower my car loan APR from 9% to about 4% and it is possible should I do it? Will this keep my monthly payment same but I pay more on my loan than interest? Or I’m better off refinancing for another 5year plan to lower my payment and APR to 5%?

    Answer: Any loan that has a lower APR and a faster repayment period will save you money.

    The only thing that would change that conclusion is if you have a 401k or other retirement savings plan at work and you are not contributing the maximum you can to such a plan. If your budget is so tight that you are not in this plan or only contributing a little, then I would refinance to the lower car payment and use the savings to increase your retirement account.

    You are on the right track, though. 9% APR is too high and you should get rid of it if you can.

    Question: Where can I get the best classic car loan with no money down?
    Is there a good classic car loan company that offers zero down financing? I have good credit otherwise I will just get a personal loan. Higher APR, but I don’t have to get the full coverage insurance

    Answer: Your best bet would be to take out a personnel loan. Most of the companies that specialize in classic cars have very high interest rates.

    Just remember that if you don’t have full coverage on the car that the parts are very expensive to buy. If you have to put up the car for collateral for the loan they will make you carry full coverage any way, at least until the car is paid off.

    Question: Can a bank put conditions on my car loan?
    I recently bought a car. Afterward the dealership called me back and said the bank approved me for a better APR on the condition that I buy an extended warranty plan and a prepaid service plan. Can a lender put such conditions on my loan or am I right to think the dealer is just trying to make an extra buck?

    Answer: The dealership upped the APR the bank quoted and now are trying to sell you a bunch of stuff to rip you off. Go to a credit union and see if you can get a car loan there.

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