Bankruptcy isn’t the end of borrowing like it used to be. While there is a lot of work required to rebuild your credit, it’s a predictable process that uses well-known methods to help get back. We asked our Freelton auto loans team to outline some simple ways to help prepare for your next car loan after bankruptcy. This is what they came up with.
Preparing for your Freelton car loan after bankruptcy
The main preparation you can make for the car loan after bankruptcy is to improve your credit score. This doesn’t really begin to happen until the bankruptcy is discharged, so we’ll assume this is where you are right now.
Get a new bank account
Getting a new bank account is like a fresh start. It’s your opportunity to begin again and rebuild.
Use a bank that offers a chequing account to those with poor credit and make sure the account can handle automatic payments. If it also offers a credit card, get one, otherwise we’ll get one later.
Set up automatic payments
When you get your new bank account, remember to switch any automatic payments you have running to your new account and set up any outgoings that you can pay automatically.
This will help you avoid missing payments in the future, which will help when it comes time to apply for that car loan.
Also remember to have your salary or wages paid into the new account too!
Get a credit card
If your bank account came with a credit card, great, otherwise it’s time to get one. Depending on your situation, you may be able to qualify for a standard credit card or you may need to use a secured card.
Either way, get a credit card, set up automatic payments for the minimum each month and use it for everyday expenses.
Make sure to get into the habit of clearing the balance each month so you don’t have to pay too much interest. Time it so the automatic payment goes out, which is an entry on your payment history, then pay the outstanding balance.
Stick to your budget
Whatever the situation was that got you into trouble, you now need to paint a picture of the perfect borrower. That means using a credit card sensible for 6 months or so and not accruing much other debt.
Get into the habit of living within your means, paying everyone on time and clearing that credit card balance.
Get another card
Once you’re confident managing the credit card, get another. Repeat the same process as before, only use it for everyday expenses, pay the minimum automatically and settle the balance after.
Do this for another 6 months until you have a minimum of 12-18 months of handling your finances and paying off debts.
Apply for the auto loan
Once you’re back in control and have that 12-18 months of payment history, your credit score should have improved and your financial situation should look completely under control.
If you need a new car, now would be the best time to get a car loan.
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!
For any questions or concerns, please don’t hesitate to contact us here!