Getting an Auto Loan after bankruptcy

If your bankruptcy has been discharged, it is possible for you to obtain a car loan. Lender competition has led to a great opportunity for consumers with damaged credit or bankruptcy. Unlike a personal loan, auto loans in Canada can be fast and best of all, no security required against the loan amount. Usually the vehicle loan is not difficult to get and can be financed for up to 5 years.

A few quick tips for approval after your bankruptcy are…

  1. Your car loan can help to re-establish good credit, provided you made your payments in a timely and responsible manner. Your loan payments will not give a positive impact on your credit for 12 months.
  2. Organize all of your accounts, close the ones you do not need. Wait to apply for a car loan until you have enough financial backing for the down payment, insurance, and vehicle registration.
  3. Keep in mind the interest rate will generally be higher for individuals with bad credit or a history of bankruptcy. When considering your vehicle purchase, it is advisable to begin with an average priced car rather than the more expense one. This will allow for less complications in the transaction. After bankruptcy, the lender may require more information than from someone with better credit. If the consumer is interested in a more expensive vehicle it is recommended they wait at least two years to begin developing a better credit score after their bankruptcy. The interest rate for Canadian auto loans will also be less, once the credit score has increased.
  4. Do not hesitate to discuss the situation leading up to your bankruptcy. Some lenders are willing to take into consideration the circumstances leading to the bankruptcy.
  5. A substantial financial commitment is required from those individuals with past financial instability when seeking approval of an auto loan in Canada. Many lenders expect a guarantee of regular monthly payments and demand a huge down payment. This financial dedication provides lenders with the necessary confidence to offer you a loan. The loan amount may be supported by various financing partners. Be sure to expound upon the positive changes that have occurred with your credit following the bankruptcy.