Getting a Car Loan After Bankruptcy
If you're reading this, then there's a good chance you've recently filed for bankruptcy. Naysayer's may have tried to convince you that filing for bankruptcy means you're going to have bad credit for the next seven years. Your attorney, friends, or family may all be telling you how bad your life is going to be because of your bankruptcy.
This is NOT true.
While filing for bankruptcy definitely hurts your credit, you can overcome most of the harmful effects in as little as one year. If you know how to work the credit system, you can have good credit again soon.
1. Make a plan.
It's important to have a budget and a savings plan before you start re-establishing. You have to have savings to get re-established quickly, and you'll need discipline to follow a budget and save. When you come up with a plan make sure you follow it. Also, creditors will probably send you bills for debt that was included in your bankruptcy. Make sure you take the time to inform these creditors their debt was included and provide them proof. If these creditors accidentally file a collection against you it can really slow you down.
2. Start hoarding.
While saving a couple of months salary is probably the hardest part of the process, you need to have an emergency cash fund. Besides, you'll need cash for a down payment and secured credit cards. You also need to save all of your important financial documents like pay stubs, bank statements, and bankruptcy documents. Keep them in a safe place because you?ll need them to show creditors in the future.
3. Apply for a secured credit card.
Secured credit cards are a great way to get your credit back on track. Just make sure you don?t use them more than once. That's right, get a secured credit card but use it only once. Pay it off the first month you get a bill. Once that first payment is made on time, the credit bureaus will report that you're making payments. Then destroy the card. Even if the card is no longer being used, the credit bureau will still show that you're making payments on time and you will be building credit.
4. Buy a car.
I know that the idea of buying a cheap used car (2-4 years old, less than $10k) may not get your motor running, but remember the goal here is to re-establish quickly. You want to make a few payments on this car (6 to 12) and then trade it in for something nicer. Just make sure you have a down payment before you go shopping.
5. Get more credit.
If you have a secured credit card (or two) for a few months and your car payment has been paid a couple of times you probably qualify for a regular, unsecured credit card. Make sure to apply for a card from the big names like Visa, MasterCard, or Discover. Whatever card you get, it's important that there is no annual fee. You should also try to get a credit card from your local credit union. If your application is denied, that's OK. Most denials are based on computer analysis which is often incorrect. Simply call the credit card company and ask them why you were denied and what you can do to get approved. Often times your denial will be overturned.
6. Get the car you like.
You've done all the steps, a year or so has passed, and your credit is officially re-established. Trade in that cheap car you bought in step four (unless you like it of course) and get something that you want with the benefit of having good credit.
While re-establishing credit after a bankruptcy is fairly easy, it's also easy to slide back into a bad credit pattern. Make sure that you are always saving money -- if you have savings, you have options. Also, take a look at your life and your spending and compare it to your habits before you filed bankruptcy. Are you doing some of the same things as before? If so, make a change. While re-establishing after your first bankruptcy is simple, re-establishing after a second is very difficult.
Author Jason Lancaster has many years of knowledge & experience in auto finance. He's helped hundreds get a car loan after bankruptcy and knows how the credit system works for bankruptcy car loans.
Don't reprint the same version as everyone else. Get your own unique content bankruptcy car loans article here.
Rating: Not yet rated
Comments
No comments posted yet.
Add Comment
You do not have permission to comment. If you log in, you may be able to comment.
