After 2008, when the economy began to plummet and Americans found themselves squeezed between declining home values and high unemployment rates, more Americans than ever before were forced into bankruptcy. Through no fault of their own, almost ten percent of all Americans declared bankruptcy as the only way to save their financial futures. Unfortunately, it takes a long time to fully recover for a bankruptcy, and many people experience difficulty in finding auto loans after they have a bankruptcy on their credit history. Complete Auto Loans has never turned down an auto loan application, and they have a few tips for people who have declared bankruptcy.
What Does Bankruptcy do to Credit?
As a general rule, bankruptcy will completely destroy your credit for a few years. Someone who has declared bankruptcy is a risk to lenders, and they respond with higher interest rates and a reluctance to offer loans. You may be stuck with sub-prime loans in the near future, but you should be able to receive a loan even if your bankruptcy was relatively recent. No situation is totally hopeless, and Complete Auto Loans understands how critical it is that you have a fair interest rate and an affordable loan for the car that you need.
Explaining the Terms of your Bankruptcy
Every bankruptcy is different, and people are forced into bankruptcy for all sorts of reasons. Explain the reasons behind your bankruptcy to your lender. If you were forced into dire economic straits for reasons outside your control, such as a death in the family or medical debt, lenders will see you as a better bet than someone who declared bankruptcy due to avoidable expenses and spending. There are plenty of financially responsible people who declared bankruptcy for some reason or other, and lenders are eager to capture their business.
Work with you Bankruptcy Trustee
For most bankruptcies, any new debt must be approved by a trustee of the bankruptcy court. If you are seeking a new auto loan, make sure that the car is absolutely necessary for your financial well-being, such as a car that you need to commute to work. Don’t expect a luxury vehicle either, as the amount that you will be allowed to take out as a loan will be relatively low. On the bright side, trustees will help you look at loans to avoid being gouged by lenders that give extremely high interest rates to people with bad credit. You can look for loans with interest rates around 15 percent, far higher than people with ideal credit but nowhere near the astronomical 30% APR or higher that many grey market lenders charge.