A bankruptcy is a bankruptcy and it is bad no matter which way you look at it. Chapter 7 bankruptcy stays on a consumers record for ten years. And it pretty much puts the kibosh on most loan application approvals until that time has lapsed. Having credit liability taken off a credit report due to filing bankruptcy improves the chance of landing a loan over having a credit report groaning under a high debt load.
Are Lenders Willing to Work with Chapter 7 Bankruptcy?
Lenders exist who have seen that there is a need and a market for car loans for folks who have had to file a Chapter 7 bankruptcy. These lenders tend to have high down payment requirements, offer higher interest rates, and have more stringent repayment terms. These lenders are taking a big risk by financing a car for bankruptcy applicants.
Non-Traditional Lenders Lead the Way
Most of the lenders who will take the risk of poor credit applicants are non-traditional lenders such as banks or credit unions. These lenders have stepped in where the usual financial institutions will not. Because of these financially troubled times, there is a large number of folks needing financing in spite of their bankruptcy status. And because competition has become fierce, it is easier to find and negotiate a pretty good deal.
How Do You Find Lenders and Get a Car Loan?
The best bet for finding a car loan for poor-credit borrowers is to scour the internet. Punch bankruptcy loan or poor credit loan into your browser and you will be rewarded with a list of lenders willing to consider financing your car loan. Some of the websites you find will be comparison guides. They will get a bid from a number of lenders, often within minutes.
Do Not Be Bullied
Yes, having a Chapter 7 on your credit record is a pretty bad mark. But you should never allow yourself to be put in a position where you are led to believe that your lender is doing you a favor. Yes, they are taking a risk to by lending to bankruptcy borrowers, but they are paid well for that risk. You are doing them a favor by offering them your business. If a potential lender is pulling this on you, tell them about it and find another.
Be Honest and Be on a Budget
The minute you offer identification to your prospective lender, the will see that you have a Chapter 7. Be prepared to offer your lender a budget, showing them how you will be able to cover your payments. They will want to know what about other obligations. Though they may be willing to lend in spite of your bankruptcy, they are not going to lend unless you show them that you have the income required.
Have Reasonable Expectations
Get a car you are sure you can afford, not only regarding monthly payments, but also tags, titles, taxes, insurance, and maintenance. And face the fact that you may be pay larger than usual down payments and monthly payments. Still, competition is fierce, so shop diligently for the best deal.
Rebuilding Your Credit
Your first loan after declaring a Chapter 7 will mean a lot. You have more or less wiped your record clean, do not botch it with yet another default. If you do land a car loan, make sure your payments are made on time, every time, no excuses. By doing so, you have started the process of getting lenders to trust you again. And after that first loan, the others will come more easily and your rates and terms will be more favorable.