Miami was once listed by Forbes.com as one of the worst cities for commuters. Thankfully, the city’s citizens need not settle for public transportation, as they can get their own cars through financing. Even those who got out of bankruptcy can obtain a car loan. If you have bankruptcy in your credit record, don’t worry. You can successfully get a car loan—and in turn, start rebuilding your credit—by following the tips below.
Your approach to obtaining a car loan should be the same as those without bankruptcy in their records. You should take time to do some research, consider all available options and do comparison shopping. Opting for the first offer you get is never a good idea. Know that despite your bankruptcy, you can still find a good enough deal. Your situation may qualify you for a higher rate, but this doesn’t mean you have to settle for an inflated one.
Start by finding lenders, particularly those that work with individuals who have emerged from bankruptcy. Start with your bank or banks; if you are a member of a credit union, consider it as an option too. You may also ask your bankruptcy attorney for recommendations—he or she may know of some lenders who are willing to loan to those in or were in bankruptcy. Have at least three options to choose from, and make sure they are legitimate and reputable.
Be wary of lenders whose offers are too good to be true. Getting a loan from any of them may again land you in a bad financial situation. Signs to watch out for are guaranteed loans without credit checks as well as requests for upfront fees (excluding the down payment) and wire transfers.
Be realistic with the car you choose
Due to the black mark on your record, you will not qualify for a hefty car loan. This means that while you can get financing, you will not get financing for a luxury vehicle. At this point, you are too high a credit risk for lenders to give a pricey loan to. What you are eligible for is an amount under $15,000 to $20,000. Therefore, you should choose a used car that is modest but reliable. You can always upgrade after you have repaired your credit and the bankruptcy is removed from your record.
Prepare a huge down payment
You are more likely to secure a post-bankruptcy car loan if you put down a huge sum of money upfront. The recommended amount is 20 percent of the vehicle’s purchase price, but you should exceed this if you can. The amount of money you put down can boost your chances of getting the loan because it says a lot to the lender. By offering a significant sum as deposit, you prove to the lender that you are serious about the purchase and thus imply that you are less likely to default the loan.
If you don’t have a lot of money saved up for a down payment, postpone your auto purchase until you do have it. Cut back on unnecessary expenses for the meantime and put as much as you can into your ‘down payment fund.’ The money you save can bring you one step closer to auto loan approval despite your bankruptcy.