Getting a Car Loan after Chapter 13 Bankruptcy or Chapter 7 Bankruptcy
Consumers can file for Chapter 13 and Chapter 7 bankruptcy. With a Chapter 13 bankruptcy, you get to keep your possessions and pay the debt through a three to five-year repayment plan. This plan is approved by the court and involves paying a fixed amount on a biweekly or monthly basis. Chapter 13 bankruptcy can stay on your credit report for a maximum of seven years. If you file for Chapter 7 bankruptcy, certain debts might be discharged while the remaining may be paid by liquidating your property and some of your possessions.
While a bankruptcy hurts your credit score, you can still get approved for a car loan. Here’s how you can get a loan for buying a car after bankruptcy.
· Check Your Credit
Before you apply for a car loan, review your financial health by checking your credit report. Request a free copy of your credit report from Equifax, TransUnion, or Experian. While there isn’t any minimum credit score required for getting a car loan, you will have some difficulty getting approved by a certain lender if you have a low credit score.
· Improve Your Credit
Once you have reviewed your credit report, take some time to rebuild your credit if it is low. This might help you get approved for an auto loan at a lower rate. To improve your credit after bankruptcy, get a secured credit card and pay all your bills on time.
· Save Money for a Down Payment
A down payment can improve your chances of getting approved for an auto loan and may even lower your interest rate. There isn’t any specific amount that you should put towards the down payment for a car. However, if you want to secure low interest rates, try to put 20 percent down on the new car.
· Search for the Best Offer
When you have rebuilt your credit, saved money for down payment, and are ready to buy a car, search for the best offer by contacting different lenders. Compare loan terms and rates from various lenders to find the ideal deal for your situation.
Getting a car loan after bankruptcy isn’t impossible. If you can improve your credit score and save enough money for a down payment, you should be able to secure an auto loan and get behind the wheel of a new car.