Auto Finance: Bankruptcy and Auto Loans
If you have suffered financial tragedy in your adult life, than you already know what an alienating feeling it can bring when you declare bankruptcy. No one aspires to declaring bankruptcy in their lives, but financial obligations can get out of hand very easily, and sometimes there is just no other viable solution. What many people don’t expect when they declare bankruptcy is that although the initial financial obligations are now gone, they have to go on eating, drinking, paying their rent and working. Bankruptcy doesn’t remove your need for a working auto, and if you don’t have one, obtaining a auto loan after bankruptcy can seem like the next chapter of the same nightmare.
What most people don’t realize is that if you are successful in obtaining a auto loan after bankruptcy, it can be one the quickest ways to start building up your credit rating again. If you’ve experienced bankruptcy, then you’re probably wondering if there are any dependable strategies for being approved for auto financing and the answer is yes. In fact, there are loan options available to buy a auto for bad credit situation consumers that are designed especially for people in your same financial position. While you might not be able to buy the new auto of your dreams, it is feasible to get a bad credit auto loan. Loans to buy a auto for people with bad credit differ from normal loans in a couple of very significant ways:
Bad Credit Auto Loan Interest Rates
Because of your prior credit history, the interest rate you can qualify for to get a bad credit auto loan is likely to be much higher than a loan to a person with good credit. While this is not always fair, it is at the discretion of the bank or lending institution that you apply to. The reason for this is that your prior credit history is one of the most important factors a lender will use in determining your ability to pay them back. Because of your prior bankruptcy, you are considered more risky, and thus your auto loan will have a higher rate.
Bad Credit Auto Loan Amounts
As was previously suggested, you will be very restricted in the auto financing that you can get with auto loans after bankruptcy. This may mean that you get a much smaller loan amount and that you will have to make do with an older auto model. And, you will find that most lenders will want a decent size down payment for you to qualify for auto financing.
Auto Loan Terms
One of the least enjoyable parts of car loans for bad credit is that they are often far less forgiving than typical auto loans from a bank or dealership. Where a bank might give you three to five days as a grace period for late payments, one late or missed payment with a bad credit car loan may result in the bank asking for the entire balance to be paid at once, which is a terrifying prospect.
Bad Credit Auto Loan Advice
Obtaining a loan and buying a auto after bankruptcy can be one of the best ways to help rebuild your credit. If you focus on purchasing a used, reliable auto, there are definitely options for people with bad credit. The best way to obtain a bad credit auto loan is to connect with some local dealers in your area that specialize in working with bad credit situations. You can find these dealers by visiting the Auto Loans area of AutoBuying101.com.