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Contrary to popular belief and long standing myth, getting a car loan after bankruptcy does not have to be a difficult task or insurmountable goal. In fact, car loans are among the easiest to obtain loans that you can apply for following the discharge of your bankruptcy. If you have filed Chapter 7, Chapter 11, or even Chapter 13 bankruptcy, and have had your bankruptcy discharged or your debts reorganized, now is the time to apply for that new car loan.
How Your Employment Factors Into Your Car Loan
While derogatory credit items stay on your credit record for seven years, bankruptcy notations are legally on your credit file for as many as ten years in most cases. However, there are lenders who specialize in financing those individuals who have been forced to file bankruptcy, and specifically with those individuals who demonstrate a positive employment record with steady and consistent employment for five years or more.
Making A Car Purchase Budget
Before shopping for your new car, be sure to determine the amount of money that you wish to spend and the type of automobile you are looking to purchase. Also make a determination if you prefer a new or used car. Many used cars are available with optional warranties and can be a better value for you as well as being easier to be approved for because you would not be asking the lender for as much money.
Types Of Car Loan Financing
Many car dealerships offer on the lot financing. It is often best practice for you to seek out your own lender for your car loan in advance because dealer financing is always padded so that the dealer makes a hefty commission on all of the sales that he sends to a particular financing group. Banks, credit unions, finance companies, and online lending sources are all viable options for you as you seek out a lender for your car loan.
Avoiding Scams
One thing that many folks with damaged credit from bankruptcy do that can really end up being a mistake is to go through a so-called buy-here-pay-here car lot. These types of establishments are notorious for selling sub-par automobiles with questionable histories - many of them have damage that is hidden from view until you get the car home and discover it is a lemon. It is best to go with a traditional car lot that can provide some type of warranty, even if the warranted must be purchased in addition to the vehicle.
Managing Your New Car Loan
Once you have received your car loan following bankruptcy, it is important that you become a good steward of your newly found credit. Be certain to make your payments as agreed and on time. It is not a good idea to pay your loan off early (this can actually have detrimental effects on your credit). But paying on time or a few weeks in advance of a due payment is an ideal way to manage your car loan. Set up automatic monthly payments from your checking account or pay online whenever possible.
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