Getting a car loan after a bankruptcy

Note that auto loans are often easier to obtain than credit card accounts once you have emerged from a bankruptcy. The reason for this is that auto loans are “secured” debts. With a secured debt, should you default on the loan, the lender has the legal right to take back the vehicle from you. This reduces their risk. The following are a number of important tips about bankruptcy car loans:

1. Down payments and interest rates.

The truth is that most people who are looking for car financing after a bankruptcy are able to get that financing. The problem is that the rate of interest will typically be very high, and the amount of the down payment will as well. Note, however, that recently, lenders appear to want to make more auto loans. This means that consumers who have a bankruptcy on their record will likely be able to get financing at lower rates and with a lower down payment than may have been required in the past. But even if you only qualify for a high interest rate auto loan, the loan is not something that has to remain in effect for years. Once you’ve shown a good pattern of making your payments, you may be able to refinance at a lower rate. This could help you get a lower rate and a much more affordable payment.

2. Discharge will usually be required by the lender.
Generally speaking, for a consumer who is emerging from bankruptcy to receive any type of loan, the court must have issued an order of discharge. In this case, the bankruptcy may not be over, but the order of discharge will need to be in place.