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How to get a Used Car Loan with Bankruptcy?
If you have suffered a terrible financial blow that resulted in bankruptcy, you know how hard it can be to get any type of loan. Don’t worry if you are tired of rejection on your car loan from neighborhood lenders. You won’t have to wait for a decade to apply for a car financing program. You can buy a car and enjoy work and life before bankruptcy comes off your credit report.
With this article, you can avoid steep rates that often accompany a bankruptcy auto loan. Use the suggestions to get better rates and avoid the feeling of being stuck with a terrible auto financing program.
Why Used Cars are better for People with Bankruptcy?
While it can be appealing to purchase a brand new car, you must go for a reliable used car. A new car is very expensive and it’s better to go for cheaper used cars. It will lower your used car loan amount and thus, reduce the car loan cost. You can opt for anything in the range of $10,000 to $15,000 because most reliable pre-owned cars come in that range. Nevertheless, don’t forget to get inspected from your mechanic.
Also, most used cars that are available in the market are not very old. This is ideal for people who have recently come out of bankruptcy.
Who can apply for Used Car Loans?
Modern auto financing has ushered in a fresh wave of change. Now, anyone and everyone can get used car loans. There are many new lenders and online companies who have made easy auto financing of old cars. Also, the car is used as collateral which makes it easy to secure better rates.
You can get an auto loan with Chapter 7 or Chapter 13 bankruptcy. It is always better to go for used car loans after you have successfully tackled bankruptcy. It is because getting an auto loan during bankruptcy means excessively high interest rates.
Process of getting a Used Car Loan with Bankruptcy
Prepare for the WORST, but don’t hope for it
Remember that there is absolute profusion of car loan choices. You can get a used car loan despite bankruptcy but you must work for it. You will have to prove the lender about your current financial capacity and ensure regular payments. It is beneficial to prepare a budget because it will give you the perfect idea of making payments.
Is Down Payment and Co-Signer possible for you?
Down payment and co-signer are two things that can turn the events in your favor. When you have bankruptcy on your credit report, lenders want to be very sure of your financial capacity. Manage a down payment of at least 10% of the total price of the car.
A co-signer with good credit history can counterbalance the effects of your bad credit history. Lenders require a co-signer with a stable debt-to-income ratio so that he can make payments in case of any failure from your side.
Know your Credit Ratings
Coming out of bankruptcy, your credit score must have taken a hit. But, that shouldn’t keep you from checking your credit ratings. Know how bad they are, just so that no lender can con you. It is often seen that lenders take undue advantage of car buyers who are unaware of their credit scores.
Applying for an Affordable Used Car Loan
Once you are done with this, open your computer and start searching for auto financing companies that offer used car loans to people with bankruptcy. You must have Bankruptcy Discharge Notification. It will tell the lender that you have successfully handled bankruptcy and will be able to handle regular payments as well.
Also, set up the payment schedule according to your convenience. If you can pay every week, ask the lender to set up payments that way. It will help you make payments on time. And, thus improve your credit score.
Remember that there is substantial car financing options available for people with bankruptcy. You just need to work hard so that you get the best deal.
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