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Tips for Qualifying for Car Loans after Bankruptcy

Wednesday, June 11, 2014

After bankruptcy, you get a fresh start with your finances. Unfortunately, if you need to make a major purchase like a car right after bankruptcy, you might have a harder time. Lenders are reluctant to give loans to people who have declared bankruptcy because they fear you will default on your loans again. If you can get a loan, it will often carry a high interest rate.

If you find yourself in this situation, don't despair! There are plenty of things you can do to get your finances in order and secure a more affordable car loan.

Re-establish your credit. The best way to get a good car loan rate is to start building up your credit now. Pay your bills on time, create a reasonable budget, and get a secured credit card to get good credit. These steps will improve your credit score and help you qualify for better car loan rates sooner.

Shop around. Although you probably won't be offered the best car loan rate, you don't have to take the first offer you're given. Shop around online, compare customer reviews, and check out companies' ratings on the Better Business Bureau web site. Watch out for lenders that request upfront fees apart from down payments and give guaranteed loans regardless of credit.

Save up for a down payment. Many lenders will require a larger down payment from people who have declared bankruptcy. Start saving now so you can meet the requirements. If you can, try saving up as much of the total cost of the car as possible. If you can pay cash for a reasonably-priced used car, you can save hundreds of dollars in interest fees.

Co-sign for a loan. If you can't find a car loan rate you can afford on your own, ask a trusted friend or family member to co-sign a loan with you. Remember, this is a significant risk for the co-signer; if you miss any payments, you can negatively impact their credit scores along with your own. Only ask someone to co-sign with you if you have a regular income.

Refinance your car. After you've improved your credit, you can qualify for lower loan rates. Wait about six to twelve months so you can take full advantage of your good credit. Also, make sure the fees for refinancing aren't greater than the money you save with a lower loan rate. If the fees are too high, you're still losing money.

Get professional advice from a bankruptcy lawyer. If you have any questions about life after bankruptcy or how to file for bankruptcy, contact a bankruptcy lawyer. Call Abakhan & Associates today at 1-877-308-8877 for professional legal advice.

Contact any of our locations in Vancouver, Victoria, Vernon or Surrey.

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