When consumers are turned down for an auto loan, they often wonder if they will ever be able to get a car loan again. If you have had a bankruptcy in the past and now want to find out how to get an auto loan after bankruptcy, this post will help you.
Check Your Credit Reports.
It can be unpleasant to think about reviewing your credit reports after bankruptcy, but it’s important to know what lenders will see on their reports. This allows you to watch for possible mistakes and make corrections.
Save up For a Down Payment.
The benefit of bankruptcy is that it can restore your cash flow, which means you can save more money for a car loan. The more money you have saved up for a down payment, the less risk you pose to the lender and the greater your chances of being approved for an auto loan.
Offer a Trade-In
If possible, trade in your current vehicle for the new one. This will lower both the amount you need to finance and your monthly payments.
Shop Around
Spend a single day getting preapproved for a car loan. Gather financial information and try to get pre-approved before you even visit a car dealership. This will minimize the potential impact multiple inquiries can have on your credit score.
Avoid Bad Loans
Before you sign any car financing contract, make sure you read the fine print. You could end up with a predatory loan that carries high-interest rates and leaves you unable to keep up with payments. When you’re looking to borrow money, ask about interest rates in terms of monthly payments, not annual payments. Also, be sure to read the contract carefully since some lenders charge hidden fees or use deceptive advertising.
Refinance
You should continue to monitor your credit scores after making on-time payments for 6 to 12 months. After that, you might be able to refinance your car at a lower interest rate.
Your auto loan after bankruptcy should be easier to get than a mortgage because of the short-term nature of the loan. Because it lasts for such a short time, you’ll need to pay close attention to interest rates, but the competitive nature of the auto industry can make this easier. If you prepare carefully, your car purchase after bankruptcy should go just fine.
