Bankruptcy is something most of us never think about, but back in 2020, over 100,000 individuals filed for bankruptcy, and that number seems to be gaining momentum. Finding a car loan after bankruptcy in Hamilton
A few generations ago, being insolvent was seen as a personal failure, but that was a different time; we now live in a debt-based economy. The average Canadian is $200 away from being insolvent!
Let that sink in for a bit; only two hundred dollars separates the average Canadian from going bankrupt.
We are talking about this statistic because if you were recently discharged from bankruptcy, then you know how difficult it can be to get approved for a car loan or any other type of credit.
So, while officially you are debt-free, on your credit report, it says you were recently discharged from bankruptcy, and that stays on your record for seven years.
Good news, though, we are going to show you the steps to take in order to qualify for a car loan.
Credit rebuilding strategy
You are in a literal catch-22 situation, you can’t get credit because of the bankruptcy, but you need credit to start rebuilding your score.
Start by signing up for a secured credit card; banks offer them like Capital One. These secured credit cards work just like a conventional car; you deposit money which secures it against default.
Then, every month, you make payments, which are reported to the credit reporting agencies. It will take time, but your score will improve until you qualify for non-secured credit products.
Reviewing your income sources
While you work on rebuilding your credit, take a closer look at your finances. You would have learned to create a budget as a condition of your bankruptcy.
However, since you do not have any debts, your income, for the most part, is clear money minus your basic living expenses.
How much cash do you have available on a monthly basis that can be allocated towards a car payment?
The last thing you want to do is go into too much debt; with the average car loan around $500, you should budget something similar for your next vehicle purchase.
How to find lenders willing to help
This is a tricky situation to be in; if you apply for a car loan after bankruptcy in Hamilton with too many lenders, your credit score will take a negative hit due to too many inquiries.
The best way to find lenders who will give you a second chance is with the help of a local car dealership.
When you go through the dealership, they will already know which lenders offer post-bankruptcy car loans.
It would be best if you were prepared to pay a higher interest rate and will not be able to buy a brand new car.
Your best option is buying a previously owned car; the dealership will have cars that your budget and still have an active warranty.
You have worked hard to get through the bankruptcy, and you can start rebuilding your life; buying a car is the first big step in your new journey.
Click here to get approved for your next car loan online today! we have a team of credit specialists ready to help you with buying a car with poor credit score, and will work with you no matter your credit score.
For any questions or concerns, please don’t hesitate to contact us here!