Purchasing a new vehicle is often the first large purchase that requires a loan after bankruptcy, and therefore it’s often a challenge. Below we’ve outlined a 4 steps to guide you through the process.
1. Buy Pre-owned: New cars depreciate 20% as soon as you drive off the lot, and another 50% after the first three years. Really, they’re not a very good investment. After filing bankruptcy, it’s smarter to get an affordable, reliable vehicle that won’t strain your budget, especially because your interest rate could be high due to damaged credit.
2. Buy Reasonably Priced: Most experts recommend spending no more than $10,000-$15,000 for your first vehicle after bankruptcy. Everyone has a different budget, but anything more expensive than this is often excessive, especially given the inflated finance charges you’ll face after bankruptcy. Alternatively, anything cheaper may not be reliable enough for long-term use. For information on how much your monthly payments will be, use the Auto Loan Calculator.
3. Take Steps to Repair your Credit: in order to maximize your chances of loan approval and lower your interest rate, it’s vital to start rebuilding your credit. The best way is a credit card, either secured or unsecured. This is KEY. Although these credit cards will carry exorbitant interest rates and come with very low limits, often less than four figures, they are worth every penny because they’re one of the best ways to start repairing your credit. Just make the payments month after month. It’s usually best to have a good six months of clean payment history for maximum chances of getting your car loan approved. That said, there’s nothing to lose in applying today online.
4. Apply Online: going from dealer to dealer in your hometown or the nearest metro area is hugely time-consuming, and may require you to have your credit report pulled an unnecessary number of times. Instead, you can apply online via our secure system and have dealers contact YOU who are willing to extend car loans after bankruptcy.
