How to Get a Bad Credit Bankruptcy Car Loan

A bad credit bankruptcy car loan may be harder to find, but it is still available from a number of lenders. It is in the interests of the lender to offer money to those who can demonstrate affordability because a poor credit history means a better return (more interest) for them. They also have greater security because the car acts as a form of collateral in the event of default.

Raising FICO Credit Scores

The longer someone waits before buying a car after bankruptcy the more likely they are to be approved. This is especially true for those who continue to make punctual repayment on other credit agreements, such as the mortgage and unsecured credit cards for bad credit.

FICO credit scores will improve substantially after two years of reliable payment. This could allow you to refinance a bad credit car loan in the near future at a vastly more favorable rate of interest.

Correcting Errors on Credit Reports

It may be a surprise to discover that a number of credit reports contain inaccurate data. Get access to your free credit report and scrutinise it for mistakes. Should there be any errors, you should contact the credit reference agency (with supporting evidence) directly in order to get the problem rectified. With the exception of credit cards, do not contact the lender.

It is important to get errors corrected a minimum of 6 months prior to applying for a bad credit bankruptcy car loan. Although not a free service, help and assistance can be sought from a licensed attorney.

Establish Affordability

Those buying a car after bankruptcy will need to prove that the payments are affordable. This is because lenders realise that those with a high debt to income ratio or minimal disposable income are far more likely to default on a bad credit bankruptcy car loan.

Many borrowers make the mistake of borrowing more than they can afford. It is important to budget properly in order to establish a sum of money that can be maintained until the loan is fully cleared. Failure to achieve this will lead to the lender selling the vehicle and you (the borrower) being responsible for the repossession deficiency. It is possible to avoid this setback through proper budgeting. Don't buy an expensive car simply because you can.

Car Loan Lenders

Rather than approaching a dealership, use a car loan broker to source the most competitive deals. This will also provide an opportunity to explain why financial difficulties were originally experienced.

Provided that affordability can be established, a bad credit car loan is achievable. Trawl the market using a car loan lender to get the best deal. Remember to refinance a couple of years later once your FICO credit score has started to improve.

Disclaimer: This article in no way attempts to provide legal, financial or tax advice. One should consult a licensed attorney, tax advisor, or other qualified financial professional before proceeding.