Car Loan Financing After Bankruptcy
How to get a car loan after bankruptcy in Mississauga, Ontario?
- Get your credit reports and credit scores
- Put together a down payment
- Shop For a Car
- Avoid bad Car loans
- Submit your Payments on time
- Refinance to get a lower interest rate
How to get a Car Loan if you file for Bankruptcy?
Don’t think that if you’ve had to claim bankruptcy that a car loan is out of the question forever. In fact, many lenders are very agreeable to working with individuals recovering from bad credit. Here are some steps to follow so that your post-bankruptcy car loan application is successful.
1- Get your credit reports and credit scores
We should all check our credit reports and scores on a regular basis in these days of identity theft. If you’re coming back from bankruptcy, you want to check it at least once every six months to make sure no errors have arisen. It happens. Lenders for a car loan are going to look more closely at your history with automotive loans, so check to see what the report says.
2- Put together a down payment
After a bankruptcy, many financial advisors urge clients to operate on a cash only basis for a full year before attempting to rebuild credit through loans. A sizable down payment indicates less risk for the lender. If you default, they have your vehicle as collateral. Trade in your current vehicle to loosen up extra cash toward that larger down payment if the need for a vehicle is urgent.
3- Shop around
Do your car shopping in one day if possible to limit the number of credit inquiries, which can impact your credit score. Gather the necessary paperwork, from pay stubs to your actual credit report. Pre- approval before you even step into a dealership is a great idea if you can make it work. The more recent your bankruptcy, the higher the rate on the loan will be. But if you walk in with an existing deal in hand, many dealerships will try to match or beat it. Click here to view our New and Used Inventory
4- Avoid the worst loans
Be careful about what sort of contract you sign; individuals with poor credit history can become victims of predatory loans. Watch out for hidden costs and make sure at the outset that the monthly payments are comfortable for your financial situation. If you default too soon after a bankruptcy, there is no option to file again so soon. Get Pre-approved Here or Click here to Calculate Your Payments.
5- Pay on time
One of the best ways to rebuild credit after a bankruptcy is to make regular car payments, on time each and every month. It raises your credit score more quickly than if you didn’t borrow money for a car.
After six to twelve months of regular payments on your car loan, check your credit rating. You may see an improvement to your score, which then means you can re-finance the loan to get a lower interest rate. That’s not a guaranteed outcome, so exercise caution and purchase a car you can definitely manage at the original monthly payment should lowered interest not be offered.