How to get a car loan after bankruptcy?

  1. Get your credit reports and credit scores
  2. Put together a down payment
  3. Shop around
  4. Avoid the worst loans
  5. Pay on time
  6. Refinance

  • Get your credit reports and credit scores

In the era of frequent identity theft, we should all check our credit reports and scores on a regular basis.

Check it every six months to make sure no errors have arisen. Automotive lenders are going to look

more closely at your history with automotive loans than at other details, so check to see what your

report says in advance of applying.

  • Put together a down payment

Try to operate on a cash-only basis for a year after a bankruptcy. A sizable down payment demonstrates

less risk for the lender. If you do default, they do have your vehicle as collateral. If your need for a

vehicle is more urgent than the cash you have on hand, trade in your current vehicle to loosen up extra

funds toward the down payment.

  • Shop around

Limit your car shopping to one day. It reduces the number of credit inquiries, too many of which can

impact your credit score. Gather your pay stubs and your printed credit report. Obtaining pre-approval

before you visit a dealership is also a terrific idea. If your bankruptcy was more recent, your loan rate

will likely be higher. But if you walk in with an existing deal in hand, many dealerships will try to match

  • Avoid the worst loans

Be very careful when choosing a lender. Too many 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 you. Defaulting too soon after a bankruptcy, your range of options is


  • Pay on time

Regular car payments are an excellent way to rebuild credit with fair speed after a bankruptcy. If you're

on time each and every month, it raises your credit score more quickly than if you didn't borrow money

for a car.

  • Refinance

After six to twelve months of regular payments, examine your credit rating. There may already be visible

improvements to your score. You can then try to re-finance the loan to get a lower (and even more

manageable) interest rate. A lowered interest rate within that time frame is not guaranteed, of course.

Exercise caution and look forward to the eventual benefits of restored credit.

Q & A: 

  1. Can you buy a car if you file for bankruptcy? 

Filing for bankruptcy doesn't necessarily mean you'll never be able to get another car loan. Quite a few

lenders are amenable to working with individuals attempting to rebuild credit. Here are some steps to

follow so that your post-bankruptcy car loan application is more likely to be successful.

Related Links: