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Car Loans After Bankruptcy - 6 Top Options To Consider

Qualifying for car loans after bankruptcy may not be the easiest thing. However, getting a car is an almost essential element in order to get to work or find a job, so that we can begin building up on our finances after bankruptcy.

With bad credit, auto loans after bankruptcy may not be the easiest to obtain. However, there are ways to get there. Here are 6 options to consider:

Second Chance Car Loans

Some auto dealers work with lenders who finance second chance car loans for their customers even after a bankruptcy. Second chance loans are offered to people with lower credit, who may have difficulty securing a regular loan. Even after you have filed for bankruptcy, you may still have certain qualities in your previous car buying history that puts you in good stead in the eyes of the lender. For example, you have successfully paid off all your previous auto loans, you have no history of car repossessions, and you have current employment. In addition, you may need authorization from the bankruptcy trustee.



Buy Here Pay Here/ No Credit Car Loans

Another way to get a car loan after bankruptcy is to go for no credit car loans, otherwise known as buy here pay here car loans. Approval of the loan is more flexible because the car lot itself is offering the auto financing. With in house financing, there are no third party lenders to complicate the situation. A sample deal may be $1000 down and $75 a week in payments, for an $8000 car purchase. The buy here pay here dealership may still check your credit score and take a cursory look into your financial history, but most of these loans are approved based on the fact that you have a job. Sometimes, that is overlooked too. Some dealers may also want you to provide a long list of contacts or references, so that if you should default, they can call on your contacts, giving you social pressure to want to make good on your payments.

The benefit of this arrangement is that you are able to get car financing without having a lot of money down or credit, and there is very little restrictions to being approved. The downside is that the car offered to you is often an old clunker priced way beyond their Kelley's blue book value. Interest rates are amazingly high as well, sometimes 20% - 25%. They are also very tough when carrying out car repossessions in case of a loan default. In general, buy here pay here dealerships do not have a high reputation, so you will need to be very careful if you choose to go this route. This is a method of last resort when it comes to getting a car loan.

Bank/ Credit Union Personal Loans

Don't overlook your bank or credit union when it comes to getting a loan at a reasonable interest rate. The money from the loan could be allowed for another personal use, including for autos. You may have been a customer with the bank for a while, and if you have a good banking history, they may feel confident enough about your ability to pay. They may require that you direct deposit your paycheck into your checking account at the bank.

Another option is to look into credit unions that you can join and that offer personal loan or car loan programs to their members. You may be eligible to join a credit union by virtue of your employment with certain organizations, your line of work, and affiliation with other organizations. Sometimes, credit union membership is also based on living in a certain geographical area or district. Whatever the requirements are to join the credit union, once you are a member, they will be open to working with you on providing a loan. You will still have to meet their minimum requirements, but many with bankruptcy histories have been able to secure loans and pay for a car through credit unions.

Save Up and Pay In Cash - Give Yourself The Car Loan

Perhaps you feel that you do not enough money after a bankruptcy to purchase a car and need a car loan. However, if you are unable to qualify for a second chance car loan with reasonable terms and interest rates, or a personal loan from a bank or credit union, when not take a moment to reflect on the possibility of saving up and buying a used car for cash instead of getting a loan from someone. Before taking on a last resort loan from a buy here pay here dealership that may be over-charging you for the car and ongoing interest payments, consider the possibility of financing your auto purchase by saving up.

You could go through all of your expenses for one month, and take off those that you can temporarily stop. If you do not have a job and income, can you take on a part-time job to get some income coming in? Since you do not have a car, you will have to make arrangements for transport. This may mean waking up earlier, doing some extra walking, riding a bike, or getting a ride from friends to get to work. You may be able to save up an extra $1,000 - $2,000. With that, you can browse through the Car Listings on Craigslist and find a used car and driveable condition.

Family Or Friends Auto Loan

This is similar in concept to the save up and pay in cash idea above. If you are unable to get the amount by saving up on your own, could you ask family, relatives or friends for help in a loan? Borrowing and lending money can be a sensitive topic, even amongst family and friends. If you do this, it is a good idea to be serious and committed on paying back the loan plus any interest promised. Otherwise, you risk putting the relationship in jeopardy, and destroying your financial reputation amongst family members or your group of friends.

Charities/ Non-Profit Car Ownership Programs

There are charity and non-profit organizations and churches that offer affordable used-car programs to people with low income. These organizations may have received cars from donations. Others purchase vehicles at auctions, using funds from donors, or public funding that their group is eligible for. Once they get the used car, they turn around to fix the car up and then re-sell it to people who qualify for their programs. The prices are usually very low, and they also offer low interest loans to help people obtain car ownership.

Obtaining a car loan with bankruptcy can be made easier if you find that your qualify for such programs. They understand the importance of car ownership for people who may be shut out of owning a car through more traditional means.

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