Bankruptcy can cause some significant changes to a person's life, but that's a bit expected going into the process. So once it's over and the filing is complete. Many folks wonder how long it will take to get back to normal and be able to make big purchases again. When it comes to buying a car, it's not that long at all, but there are some changes one should expect.
Believe it or not, there are lenders who will be willing to lend to a post-bankruptcy buyer soon after a proceeding, but that doesn't mean they should be relied upon.
Regardless of being in the search for a car loan after bankruptcy, a buyer should still do some window shopping and compare offers. This is the best way to identify the best option of what's available versus just going with the first offer that comes along (which can often be the wrong one to choose).
The biggest amount of rejection a person is going to find will come from the large corporate lenders. When a borrower deals with a local lender such as a credit union or dealership supported by a credit union, there's a far more receptive response. Most local lenders want to support their communities and are easier to work with as a result.
"Working with a local dealership who has established contacts and financial relationships with lenders can be a significant benefit to car buyers with less than perfect credit. " according to Allen Gulajan, President of Car Smart, a used car dealership in Temple Hills, MD. "An experienced dealership, who has key relationships with lenders can advise buyers of the correct approach in order to secure auto financing regardless of your credit score."
Take Advantage of Having Filed Chapter 13
While most people tend to have filed a Chapter 7 filing, those who have filed Chapter 13 stand at a better position when seeking a loan again. Lenders know that Chapter 13 filers will ultimately pay all their debt, the schedule has just been changed by the court, not eliminated. That means the party is a far better risk because no one is seeing their loans become total losses. As a result, lenders tend to be far more receptive to post-13 filers. They just need to apply and ask.
Even lenders who are liberal will have their limits, so no one after a filing should be expecting to win financing to buy a BMW or a Mercedes. Aspirations should be focusing more on domestic cars that cost a lot less. Trucks, vans, family cars and basic commuter vehicles will all get a far better reception than a sports car or a fully tricked-out SUV. Be realistic and lenders will be far more cooperative.
Focus on Car Buying First
A car loan is one of the best things to go after in a post-bankruptcy status. This is because the car is often the collateral on the loan, so it rates as a secured loan and scores far higher on a credit record. That in turn means it's worth more and improves a credit score faster. So while pursuing such a loan may seem a bit challenging, it can often be far more rewarding, providing both the means to a new car as well as a new credit establishment. That serves a consumer far better and faster than waiting an assumed seven years for bad credit to go away.