Get a Car Loan Even After Bankruptcy
You may think that bankruptcy means you’re ineligible for a car loan, but that’s not necessarily true. We can help you get the financing you need to get back on the road. You’re not alone.
Many Americans are struggling to keep up with their car payments despite their best efforts. We understand and can help you get an auto loan with open bankruptcy.
In recent years, there has been a sharp increase in the number of Americans who are erring to keep up with their car payments. Despite making significant financial sacrifices, many people still cannot cope up with the high cost of car ownership. This is due, in part, to the fact that the average American’s wages have not kept pace with the rising cost of living. Additionally, car ownership costs have increased significantly in recent years, thanks to increased gas prices and expensive repairs.
AllCreditCarLoans is here to guide you and make you understand that having car loans after bankruptcy is possible. Let’s dive into the basics.
Different Types of Bankruptcy Filings
Although the primary goal of bankruptcy is repay outstanding debts, not all bankruptcies are created the same. There are six different types of bankruptcy:
- Chapter 7: Liquidation
- Chapter 13: Repayment Plan
- Chapter 11: Large Reorganization
- Chapter 12: Family Farmers
- Chapter 15: Used in Foreign Cases
- Chapter 9: Municipalities
Didn’t the list take you by surprise? It is because most of the time, people will only be dealing with the two most popular types of individual bankruptcies: Chapter 7 and Chapter 13.
Let’s get a better understanding of the two
Chapter 7 Bankruptcy
The most common type of personal bankruptcy filing is Chapter 7. Also known as immediate bankruptcy or liquidation. Any of your valuable assets will be sold by a court-appointed trustee to pay off your obligations (the people you owe money to). Unpaid unsecured debt (like credit card debt or medical bills) is typically dismissed. But as was said earlier, this excludes non-dischargeable debts like taxes and student loans.
Depending on your location, the court may decline to mandate the sale of specified items. For instance, most people who file for bankruptcy under Chapter 7 can maintain their houses, cars, and retirement money, but nothing is guaranteed. You can only put off a foreclosure; you cannot stop it. Reaffirming the obligation, which means renewing your commitment to the loan arrangement and making payments, is the only way to keep possession of assets you still owe. On the other hand, the bulk of Chapter 7 bankruptcy filings are asset-free, which means there isn’t any real estate that may be sold.
You can only file for Chapter 7 bankruptcy if the court determines you do not earn enough money to repay your debts. The means test, which examines your finances and compares your income to the national average, forms the foundation for this judgment. It assesses if you have enough discretionary income to pay back a sizable chunk of your creditors’ debt. If your income is insufficient, Chapter 7 may be an option.
Remember that if you file for Chapter 7 bankruptcy, you will have to go to a creditors’ meeting where the people you owe money to will be able to interrogate you about your debt and financial status. That isn’t really as fun as it sounds. Chapter 7 bankruptcy is permanent on your credit report for ten years and cannot be filed again for eight.
Chapter 13 Bankruptcy
Your debts will be restructured through Chapter 13 bankruptcy. You can settle your secured debt and a portion of your unsecured debt in three to five years if the court authorizes a monthly payment plan. Your income and debt load dictate your monthly commitments. On the other hand, the court has the power to impose a rigorous budget and scrutinize all of your transactions.
With this type of bankruptcy, you can keep your possessions while paying off any inevitable debt. Furthermore, Chapter 13 may help you avoid foreclosure by giving you more time to make timely mortgage payments.
For instance, someone who has secured less than $1,257,850.3 and unsecured debt less than $419,275 may file for Chapter 13 bankruptcy. Additionally, you have to keep up with all tax filings. You should also be aware that a Chapter 13 bankruptcy stays on your credit report for seven years and that you have a two-year waiting period before you can file for another one.
How to Get a Car Loan after Bankruptcy
When considering buying a car, one of the first things you need to do is figure out how you will pay for it. One option is a car loan. However, if you have an open bankruptcy, you may think getting a car loan is not an option. Some lenders will work with people in this situation.
Here are possible steps you can do to get the best bankruptcy auto loans possible:
1. Talk to Your Bankruptcy Attorney
Your attorney may be able to recommend lenders who will work with people in your situation. He or she may also be able to help you get your credit score back up so you can qualify for a car loan.
2. Look For Special Financing Programs
Many lenders offer special financing programs for people who have had financial trouble or poor credit in the past.
3. Use a Pre-approved Loan
You can use this type of financing to get a car loan, even if you have an open bankruptcy. The lender will not see your financial information until you are ready to buy the car.
4. Apply for A Secured Credit Card
A Chapter 13 bankruptcy can remain on a debtor’s credit report for as long as seven years. You don’t have to wait years before purchasing a vehicle, but you should consider giving yourself some time to rehabilitate your credit after declaring bankruptcy.
Apply for a secured credit card and paying it off each month for a year prior to obtaining an unsecured credit card and a car loan. A strong credit history will increase your credit score, which is crucial for deciding whether you will be approved for an auto loan and at what interest rate.
Where to Find Lenders Who Offer Car Loans to People in Bankruptcy
If you are in the market for a car loan and have recently filed for bankruptcy, you may feel like your options are limited. However, some lenders will work with you, even with bad credit. Here is a list of some of those lenders, along with information about the types of loans they offer:
Local Credit Union
There are a few ways to get a car loan with an open bankruptcy on your record. You can either try to find a direct lender or go through a credit union or bank. You’ll want to ensure that the lender knows your bankruptcy and that they’re comfortable working with you. Depending on your situation, there may be some limitations on your borrowing ability, so it’s important to talk to the lending institution about what those are before you sign anything.
Search for Online Lenders
The internet can be a great place to search for lenders when you need a loan. You can compare interest rates and terms from a variety of sources. However, it’s essential to be aware of the risks of borrowing money online.
Be sure to research any company you’re considering doing business with. Check out the company’s website and read reviews from other borrowers. Also, make sure the lender is licensed and registered with the state.
If you’re looking for a personal loan, you may want to consider peer-to-peer lending. With peer-to-peer lending, you borrow money from individual investors rather than a bank or credit union. This can often result in lower interest rates and more flexible repayment terms.
AllCreditCarLoans, with its wide network of car loan providers, owning a car after bankruptcy is a reality! Also, make sure to check out our payment calculator to know which auto loans are right for your credit reports and the possible needed down payment.
Bank
When considering a car loan, the bank is often one of the best places to start. This is especially true if you are in bankruptcy. The bank has a vested interest rate in helping you get back on your feet, and they can often be more flexible than other lenders regarding terms and interest rates.
If you have bad credit, a car loan from the bank can be a great way to rebuild your credit rating. By making your payments on time, you can show that you are responsible for your finances and can be trusted to repay a debt.
Before applying for a car loan from the bank, make sure you know your credit scores. This will help you to determine how good of a deal you can get on the loan.
Dealerships
Auto dealerships are willing to offer car loans to people who have recently filed for bankruptcy. The reasoning is that the dealership can get the car back if the loan isn’t repaid. Car loans are a big part of the business for auto dealerships, and they want to ensure that they can still sell cars even to people with a lower credit score. Bankruptcy doesn’t always mean someone is a bad credit risk, and many dealerships are happy to work with people trying to rebuild their credit after filing for bankruptcy.
Do you need a car loan but have been turned down by other lenders because of your bankruptcy?
At AllCreditCarLoans, we specialize in car loans for people who have had financial difficulties in the past. We understand that life can throw you a curve ball sometimes, and we want to help you get back on track.
Our network of auto lenders have competitive interest rates and terms, so you can get behind the wheel of the car you need as soon as possible. Plus, our application process is simple and straightforward – so you can easily get started on rebuilding your credit rating.
Apply now for a car loan after bankruptcy at AllCreditCarLoans!