Being forced to file for bankruptcy is no laughing matter. It’s a painful and frequently humiliating process that should only be resorted to when no other course of action is present or possible. However, once you have taken the plunge and declared yourself to be officially bankrupt, there is a road to recovery. You need not fear that you will never again be taken seriously as a potential candidate for a loan. If you play your cards right and take all of the necessary steps to redeem your credit, you can qualify for a car loan after bankruptcy.
How Long do the Different Types of Bankruptcy Stay on Your Credit Record?
Depending on the type of bankruptcy you file for, it can take up to 10 years for this proceeding to stay on your credit record. If you are filing for a Chapter 7 bankruptcy, it will usually take about 120 days for the case to be closed. This bankruptcy will stay on your record for seven years. A Chapter 11 bankruptcy will stay on your record for ten years. However, this does not automatically mean that you are disqualified for this period from being approved for a car loan. There are several things that you can do to reclaim your credit and receive the loan you need.
How Long Does it Take to Qualify for a Car Loan After Your Bankruptcy?
It will certainly take some time to repair your credit record to the point where you can once again be viewed as a realistic candidate for a car loan. One of the best things that you can do to begin the healing process is to apply for a secured credit card. If you are successful in getting the card, your next course of action should be to pay it off each month for a period of 12 months. A fresh set of positive credit actions, as exemplified by your history with this new card, will help to weigh the judgment of a loan specialist in your favor.
Compare Lenders and Prepare to Pay a Higher Interest Rate for Your Loan
Your next course of action will be to review any potential offers that may come from the various lenders that you contact. It may be possible for you to be approved for a car loan within a year or so after you declare bankruptcy. However, there are certain things that you will need to be prepared to have to agree to. Among these will most certainly be a higher interest rate. You may also have to meet a much higher down payment requirement than would be expected of an individual with a better credit history. These strictures are in place to protect the position of the lender.
It’s a Good Idea to Get Preapproved for Your Financing
One of the very best things you can do to secure success for a car loan is to get preapproved for your financing. Getting this preapproval from a qualified lender will shorten the process and enable you to have much more of a say when it comes to the type, make, and model of vehicle that you can buy. If your application is approved, you will also have much more prior knowledge concerning the exact terms of your loan. These terms may include the exact duration of the loan itself, the size of the loan, how much the interest will be, the size of your monthly payment, and other details.
Contact a Car Loan Specialist for More Details
There are many more conditions that may apply to the process of being able to qualify for the loan you need. If you are interested in learning more about how you can qualify for a car loan after a bankruptcy, it’s an excellent idea to contact a car loan specialist for more details.