How to get a car loan after bankruptcy

On Behalf of | Nov 29, 2021 | Bankruptcy |

Consumers in Newport Beach, California who see no other option to remove debts may file bankruptcy. Bankruptcy removes certain unsecured debts through liquidation of property or repayment plans. However, many consumers think they can’t get loans after bankruptcy, but it’s not true.

Credit report accuracy

A consumer should check their credit reports for errors, ensuring accounts that have been paid reflect it. They are entitled by law to one free credit report annually from each of the three major credit bureaus.

Sometimes, bankruptcy cases may not be reported as closed, which can prevent them from being approved. It can take up to 60 days for a debtor to get the documents from a discharged bankruptcy, so creditors can investigate.

Secured credit cards

Filing bankruptcy impacts credit for several years, so filers will commonly pay higher interest rates and need to make a higher down payment. Experts suggest waiting one year before applying, and in the meantime, applying for and paying off a secured credit card.

Secured cards require a deposit to use, but they are commonly more lenient and offer a fast way to rebuild credit. The deposit commonly equals the amount of the credit line, with the possibility of increasing it by making timely payments.

Other considerations

If consumers can not wait until credit improves, they may try a cosigner to increase the odds of approval. There are many lenders who prey on people with bad credit, such as no credit check, so they should carefully study each offer.

Saving for a bigger down payment helps a borrower appear more favorable to the lender. Filling out a pre-approval application makes it easier to study the terms beforehand and avoid high-pressure salespeople.

While it is possible to recover from bankruptcy, it may take several years to see improvements. However, the consumer shouldn’t fear bankruptcy, but consider it a helpful tool to remove debts.