Bankruptcy no longer has the stigma or credit-ending effects it once did but it’s still a serious situation to contend with. If you’re declared bankrupt, can you still get a car loan?
Yes you can!
It won’t be as straightforward or as cheap as you are used to but it is still possible.
Car loans after bankruptcy
A bankruptcy will stay on a credit report for six years and will be visible to every lender who checks it.
You don’t have to wait that long to get a car loan though. You can begin rebuilding credit immediately by using a credit builder credit card or a bad credit car loan.
There are pros and cons of applying for a car loan after bankruptcy.
- Begin rebuilding your credit score right away. Once you qualify for a loan and begin making payments on time, your credit score will slowly begin to reflect that.
- You get a car. If you need a car to get to work or get the kids to school, a car loan helps with that.
- You own the vehicle. Leasing is another option you can explore but you don’t end up owning anything. Owning the vehicle outright has obvious benefits.
- Higher interest rates. Regardless of why you went bankrupt, you should expect to pay higher rates of interest than a usual loan.
- Only specialist lenders will work with you. Mainstream lenders won’t usually work with people after bankruptcy. We know lots who will though!
There are many lenders willing to work with those who have suffered bankruptcy. We work with a few that appreciate the situation isn’t always your fault and will still lend to you.
You will find you won’t be able to borrow as much as you used to though. The interest rate you will be charged will likely be higher too. Even if the bankruptcy wasn’t your fault, you will still be regarded as a risk until you repair your credit.
Here are a few tips to help increase your chances of getting a car loan after bankruptcy:
- Get a credit builder card and use it for gas or groceries. Make sure to pay it off in full each month.
- Set up automatic payments for all utilities so you never miss a payment.
- Minimize your credit utilization ratio as much as possible.
- Save for a generous down payment.
- Consider a co-signer if possible.
Work with a specialist lender to secure a car loan
There are two types of specialist lender out there. The predatory type who offer exorbitant rates on loans because they like preying on people. There is also the sympathetic type who genuinely appreciate that people get into situations, often through no fault of their own.
We work with that second type of lender. We have a selection of lenders who know that life happens. Who appreciate that we have had a tough year and that many Canadians are in situations they never would have been in otherwise.
For those of you who know that you have a challenging credit situation, please visit Dixie Auto Loans where we have a team of credit specialists ready to help you get approved for a car loan today!