People who are looking for bankruptcy auto loans often do not know where to go to find a car. They may go to regular car lots and find that they are unable to qualify for an auto loan. This is because a bankruptcy creates a significant decrease in an individual’s credit score.
Most financing institutions base the qualification of an individual for a loan on their credit score. There are, however, some options when one is looking for bankruptcy auto loans that may take some research and time, but can prove successful.
It is much less depressing to find auto dealerships that have specific plans for rebuilding credit before shopping for a vehicle. In most cases one will find that large, new car dealerships do not have financing available for individuals who are seeking bankruptcy auto loans. In today’s economy, there are very few lending institutions who finance vehicles to individuals who have poor credit. So finding those dealers who do have plans which are created for poor to no credit buyers saves a lot of time.
There are some auto dealers that finance loans themselves. This appears in ads as “we carry out own paper.” It is important to be aware that many of these types of dealers make their money by selling cars that are only worth the down payment that is paid and then repossessing the car when one payment is late or missed. They then resell the car using the same strategy. Take the time to check out all of the car dealers that are being considered to find out their reputation and reliability. This is especially important regarding bankruptcy auto loans.
Using an auto dealer that works through finance companies that provide bankruptcy auto loans requires that an individual find out the name of the company and check them out thoroughly before signing a contract. Many of these companies prey on people who are desperate to get an auto loan and will take advantage of the person getting the loan.
The interest rate on bankruptcy auto loans varies between lenders and a person wants to find the best interest rate available. In addition, one does not want to get a loan that will take longer to pay off than the car will last. Most cars sold under this type of financing have serious issues and one wants to get an unbiased mechanic’s opinion before purchasing the vehicle to make sure that there are no expensive repairs that will need to be made on the vehicle shortly after purchase.
One of the requirements to get bankruptcy auto loans is that there be a good reason for the bankruptcy. If there was a medical catastrophe or some other significant event this is usually taken into consideration by the finance company. However if there is a history of late payments or no-payment of loans on an individual’s credit history they will find that even a loan to rebuild credit will be difficult to get.
Bankruptcy auto loans can be used to rebuild credit and improve a credit score. However it will require extra caution and diligence to make sure that the repayment plan is one that can be met. In most cases if an individual purchases a vehicle with at least half of the down payment they will be able to get an interest rate that they can afford. Making a big purchase after a bankruptcy requires thought, consideration and planning before one begins to build credit with large purchases.