Years ago, people who had a bankruptcy on their credit report were unable to get a decent car loan, if they were able to get approved for a car loan at all. However, today, the rules have changed. More and more lenders are offering car loans to people whove filed bankruptcy. If you have a bankruptcy on your credit report, and youre looking to get a car loan, read this article to find out three things you need to know about getting an auto loan after bankruptcy. Waiting Two Years Earns You Better Interest Rates If you need to apply for a car loan earlier than two years after the date that your bankruptcy went through, youll likely get approved; however, your interest rates will be a lot higher than they would be if you wait two years. After two years, most lenders will see you as less of a risk, and you will qualify for much better loan terms. A Bigger Down Payment Makes You a More Qualified Borrower When you apply for a car loan, your lender looks at something called your LTV ratio. LTV is the amount of money you are borrowing divided by the value of your car. For example, if your car is worth $10,000, and you are borrowing $9,000, then your LTV is 90%. 100% LTVs are generally reserved for borrowers with near-perfect credit. However, the lower your LTV is, the more likely you will get approved for your loan. Most lenders rarely decline loans with an LTV at or lower than 80%. Some Lenders Specialize In After-Bankruptcy Mortgages Some lenders specialize in loaning to people with either bad credit or past bankruptcies. These lenders will not view you as more of a risk than their other borrowers because all of their borrowers are in the same situation as you are. Your best bet is to shop online and compare interest rates and terms between different lenders. This way you can be sure that you are getting the best deal. |
