You need a car and an auto loan for it—but you have just been in bankruptcy. You’re not sure whether you can get approved for a car loan. You’re not even sure whether you can apply. We at Los Angeles Auto Approval Center know how people like you feel about a bankruptcy record. We are also aware of what you need. So to help you, here are some FAQs that can clear up the confusion in your head.
Q: Is it possible to get an auto loan after bankruptcy?
A: Yes, it’s possible! Remember the big announcement in our home page? We accept any type of credit. And that includes credit with bankruptcy record! A lot of lenders today are willing to work with people with less than perfect credit. You can surely find an auto loan despite your credit situation.
We would like to warn you, though, that the terms may not be that too favorable. That means you could get a high interest rate, heavier penalties, and getting approved itself might be a challenge. You have to understand that negative information like bankruptcy in a borrower’s credit report is a red flag to lenders. You might want to consider clearing this out before applying for an auto loan.
Q: Can I apply for an auto loan right away?
A: It’s possible to get approved for an auto loan after bankruptcy but it doesn’t mean it’s okay to do it right away. What experts suggest is a period of at least two years before applying for an auto loan. Bankruptcy record sits in a credit report for quite a long time. If lenders see that it’s been a while since you were discharged from bankruptcy, it can be easier to get approved.
Moreover, two years is a lot of time for you to fix your credit and earn some points. You can start improving your payment history with small credit accounts, pay down some debts or develop a more effective budget and spending plans.
Q: What’s the first thing I should do?
A: Get a copy of your credit report first from TransUnion, Equifax and Experian. If you’re worried about having to hand some cash by doing so, don’t be. You are entitled for a free copy every 12 months, as the law requires. All you have to do is send a request through AnnualCreditReport.com.
Once your credit report is in hand, examine it thoroughly for any possible error. Errors can lower your credit score so if you find any, dispute them with the responsible credit bureau.
The bankruptcy record in your credit report will not go away until after 7 years. This hurts if you’re trying to get approved for a low-interest auto loan as soon as possible. But here’s the brighter side: Getting approved for an auto loan after bankruptcy is easier than when you are still at it.
Q: Where can I find lenders that distribute auto loans to borrowers like me?
A: You don’t have to worry about whether there are lenders that will accept your application. Los Angeles Auto Approval Center is one you can go to for a bankruptcy auto loan. There are many other lenders in this city that also offer auto financing to credit seekers like you.
However, be wary of suspicious offers and lenders. Rip-off artists target desperate borrowers, usually those with poor credit. Don’t get trapped in their ploys which are often characterized by too nice offers and unbelievable terms. Get assistance from the Better Business Bureau or the city government in finding legitimate lenders here in L.A.