Can I Get a a Loan on a New Car?
Buying a car after bankruptcy is only one of the small problems you’ll encounter after filing. Lenders, in general, are less likely to give you a loan for any large purchase if they see “bankruptcy” on your application form.
But buying a car after bankruptcy using credit, while difficult, is not as dire as it may seem. You do have some options. Before you make the attempt, however, you have to decide if you’re getting a new car or a used car. And the strong suggestion is that you get a used or older-model car.
New cars lose more of their value in the first year than in any other year. If you’ve just filed for bankruptcy and are turning over a new leaf and getting your bills in order, the last thing that you want to be doing is wasting money on a rapidly devaluing vehicle.
4 Ways of Buying a Car After Bankruptcy
1) Get a co-signer. This is the easiest of all choices and has dual benefits. One is that, assuming your co-signer has good credit, you’ll be able to get the loan and your car with no problems. Two, you’ve begun the process of rebuilding your credit score again which will pay off for you down the road.
2) Negotiation. In some ways, buying a car after bankruptcy is easier than buying a car with bad credit. The primary reason is that the bank or dealership knows that once you file bankruptcy, you can’t file again for another 6-10 years depending on which type of bankruptcy you filed. Therefore, if you default, they have a better chance of getting money back from you than if you simply had bad credit. With the auto industry in it’s current shape, you may find negotiation easier than you think – even with a bankruptcy on your record.
3) Credit unions. If you belong to a credit union, you may find it easier to get a loan from them than from an external lending agency such as a ban. You may have to take the hit of a few extra interest points on the load, but you will have a better chance of at least getting the loan. Talk to them before you visit the dealer and see if you can get approval for the loan first. Once you’ve done that, you can visit the dealership with the confidence of being able to get the best deal possible.
4) Wait. If your bankruptcy filing is already a couple of years old, and you’ve been actively working on improving your credit score, your credit may have improved to the point where getting a car loan is not much of a problem. The further in time you get from your initial bankruptcy filing, the less the bankruptcy itself plays into a lenders decision to give you a loan. This just shows the importance of beginning the process of rebuilding your credit as soon as you can after you file bankruptcy.