Getting an Auto Loan After Bankruptcy

For those persons unlucky enough to have a bankruptcy on their record, it is tough to get financial standing back in order, and this includes such items as a new car loan. But with the advent of new technology, the Internet has made even this process much easier to accomplish for consumers in this predicament. There are numerous sites now offering a way for individuals recovering from a bankruptcy to obtain a new car loan, since it takes much less time, and is certainly not as complicated as going to a lending institution.

The first thing that consumers should attempt to fix is their credit report, since it offers a bit of information that most lenders will at least want to look at when deciding whether or not to approve a loan application. This doesn't mean it should be altered, but rather an explanation can be added to the comments page where a consumer can explain the reasons for filing for bankruptcy in the first place. This is quite simply to do, and it requires notification to each of the 3 credit bureaus (Experian, Equifax, and Transunion), who are under obligation to include this information in the credit report of the individual who is making the request.

One other trick that many individuals are trying in order to help boost their damage credit rating is to apply for and receive a secured credit card. For those people with a bad credit history, there are a large number of firms that cater to borrowers in dire straits, so credit cards are readily available to them. The only stipulation placed by the lender is a cash deposit has to be made which is at least the same amount as the credit limit that is desired by the customer.

These types of cards are good anywhere, and can be used in all of the same ways that a "normal" plastic device of this kind is typically employed. The ideal way to build up credit is to use only about 33% of the available limit for any one purchase, and try to keep the balance as small as possible for the billing cycle that occurs ever month. The credit bureaus will notice this activity, and will add points to the consumer's score quickly, because many of the lenders will make a regular report to the reporting companies.

Once that is straightened away, the next part of the plan involves making a determination as to how much car can be safely afforded in the new budgetary plan. The total length of the contract has to be considered first, and then the sticker price should be evaluated as well. The monthly payment is derived from the total cost of the vehicle divided by the number of months that the contract runs, so this number will have to be acceptable for consumers to purchase the new vehicle. A longer contract will mean smaller monthly payments, while a shorter one will indicate a large stipend has to come out of the budget each time.

This is an important consideration, and shouldn't be agreed to unless the consumer is confident that is will fit nicely into the budget for each month. Individuals who are trying to recover from a bankruptcy proceeding, would be wise to take this step seriously, because it may mean problems if the amount allotted per month means that a payment has to be skipped due to poor planning.

This will only cause more complications with the credit bureaus and the financial department at the car dealerships, who have to report this activity to the credit bureaus. It is important to only agree to the amount that can be safely paid off each month so the credit can be safely built up to a level that will be amenable to better interest rates. After deciding on an amount to borrow, a consumer can then apply for an auto loan by visiting an online lender, and then filling out the application at the website, which is typically approved or denied within 24 hours.

It can be sent to an individual or the dealership directly, but with the money available, a customer is free to make a deal. Many times, a dealer will offer a discount if the vehicle will be paid in cash, since this means there is no need to obtain any type of financing. The best advice for any consumer is to make the monthly payment on time; this will help to boost the credit rating, add points to the FICO score, and help to start putting that bankruptcy to rest.