Car Loans After Bankruptcy - How Long Do You Need to Wait to Get Approved?
The key to improving credit history after a bankruptcy is rebuilding credit. There are various ways to rebuild credit. These include obtaining a new credit card, line of credit, or automobile loan. Some people believe that bankruptcy makes it impossible to acquire new credit. However, this is not true. In fact, several lenders specialize in offering loan programs to individuals who have recently filed bankruptcy. Getting an auto loan after bankruptcy is a great way to re-establish credit.
How Long Should You Wait?
There are lenders who are willing to grant an auto loan to you one day after bankruptcy. Of course, you can expect to pay an interest rate a couple of points higher than the current average. A higher interest rate may increase your estimated monthly payments by $50 to $150. If you can afford this increase, obtaining an auto loan is a great way to improve your credit rating. You may have to receive your loan from a sub prime lender. These lenders are willing to negotiate reasonable deals with individuals who have poor credit. Comparing rates offered by online and local auto loan brokers may prove worthwhile. Submit an online application, and within a few hours you will receive a reply from various auto lenders. Compare their offers and rates, and choose the best deal.
If you do not want to pay a high interest rate for an auto loan following a bankruptcy, consider other methods for re-establishing credit. Obtaining a credit card is ideal. Credit card rates for individuals who have filed a recent bankruptcy are extremely high. However, if you maintain a low balance and pay off the balance monthly, you will not have to pay large finance fees. If possible, try and obtain at least three new credit cards.
After the new credit accounts have been opened for six months to one year, try and obtain an auto loan. By this time, your credit score will have improved. If you have established a good payment history with new creditors, you may be able to obtain an auto loan at a reasonable rate. A good payment history consists of zero missed or late payments.
View our recommended bad credit car loan companies here at: Recommended Bad Credit Auto Lenders.
Carrie Reeder is the owner of ABC Loan Guide, an informational website about various types of loans.
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