Years ago, when one filed for bankruptcy, the only way to re-establish your credit was to sign up for a debit card with major banks such as Capitol One and others. Initially, you would be given a $500 limit and after one year, if you paid your bill on time, you can convert over to a credit card. The rules for filing bankruptcy and subsequent applications for auto bankruptcy loans have changed. Auto loans attained through banks can be difficult since banks have decreased the number of loans offered and raised the credit score that will ultimately determine if you qualify.
How Can I Get an Auto Loan after Filing Bankruptcy?
One of the safest methods in securing an auto bankruptcy loan is to have a family member co-sign the loan. While many dealerships require no down payment, it would be in your best interest to do so and one that is as much as you can afford. Additionally, many banking institutions may approve the loan if your income and credit scores are high. Finally, because banks do not want to process loans without the benefit of collateral, ensure that you have that as a back up as well.
Alternatives for Auto Bankruptcy Loans
Besides have a family member co-sign the loan, there are two other ways you can obtain a loan and that’s through a family member or friend directly and your credit union. For a loan through a family member or friend, you can both set the terms of the repayment and thus avoid being denied a loan through banks or other institutions. Keep in mind that any bankruptcy filed is reported to the three credit agencies and remains on your credit report for ten years. As to your credit union, you may be able to secure an auto loan; however, also keep in mind the interest may be higher due to your low credit rating.
Reaching a Compromise
Perhaps the single most important thing you can do before applying for an auto loan after you have filed bankruptcy is to request your credit report and scores from the three agencies, start paying down your debt, and get yourself to a point where you have little or no debt before entering into another loan agreement. This compromise will serve you well in the long run. It will not only begin to build up your credit rating (which can take a year) but give you enough time to save money for a large down payment so that when you do apply for a loan, you will not be considered a high-risk investment.