Car Loan after Bankruptcy

In this day and age with unemployment at nearly an all time high credit scores hitting the gutter and debt off the charts it’s no surprise that many more people have filled for bankruptcy lately than before. Bankruptcy can be a trying time for anyone.  People wonder what will come next and anyone hoping to get a car loan don’t know where to turn. Getting a car loan after bankruptcy these days can be easier than you might think if you follow a few simple rules.

Don’t shoot for the stars right away. If you’ve had a bankruptcy and want to get a car loan you should expect to see interest rates at least a little higher than prime rates. You’ve just told your previous creditors to get bent so your next lender needs to put your credit profile into a higher risk category. Since you will have a higher interest rate, you should consider looking at cheaper cars. A cheaper car will help ensure that you can afford the monthly payment.

Know where to look.  If you’ve had a bankruptcy, you need to find a special finance program that will work with you. The best place to find a special finance program may be on-line. There you can do your research and find a company that can match you with a car loan after bankruptcy that you feel comfortable with.

Gather together your information. Once you have applied for a car loan after bankruptcy, you will need to provide several documents to your finance manager so they can send them to the bank. You will need proof of income, like check stubs, social security award letters, or child support statements. You will also need a phone bill, utility bill, and six references. These references can be friends, relatives, neighbors, or co-workers and are only used to reach you if the bank cannot contact you directly for some reason.

Most of all, don’t worry! If you’ve done all of these things and don’t go head over heals into a new loan, you should be fine. Keep your monthly payment to less than about sixteen percent of your income, and remember, this won’t be your last car, this is just a stepping stone for you to get back on track.  Once you have re-established your credit, after say a year and a half or two, assuming you haven’t let other credit slip, you should be able to go out get a better car with a better interest rate.