How to Buy a Used Car After Bankruptcy

Regardless of which type of bankruptcy you file, the effect on your credit report is damaging. Filing bankruptcy shows that you have problems repaying your debts, which can make lenders hesitant to loan you money after you have this show up on your credit report. If you need a vehicle after bankruptcy, it can be a challenge to buy a used car for yourself. However, it is not impossible to get a used car after bankruptcy. Other than potential financing difficulties, no other differences exist when buying a used car after a bankruptcy.

Instructions

1

Save money to use as a down payment or to cover the cost of the loan. The longer and more money you can save up, the easier it will be for you to buy the used car.

2

Wait as long as you can to purchase the car. Bankrate.com notes that the longer after a bankruptcy you can wait to apply for a car loan, the easier it is to get approved. This applies regardless of your down payment amount.

3

Establish a good credit record after your bankruptcy by getting a smaller loan or credit card, if you can, and making your payments on time. It can be difficult to get any type of credit after a bankruptcy, but some high interest rate credit cards are targeted at people with a recent bankruptcy. Even a secured credit card will have an positive effect on your credit history. You will likely receive solicitations by mail for credit cards but you can also use a site like Credit Card Guide to identify some after bankruptcy credit cards that you can apply for on your own.

4

Apply for a used car loan with your local bank or credit union, once you are ready to buy the used car. If you have a certificate of deposit with the financial institution, it may help you to get approved. Alternatively, you can shop for your used car at a local car dealer who specializes in helping people with bad credit get car loans. You should expect the interest rate on the car loan to be higher than if you did not have the bankruptcy on your credit report. Interest rates vary. If you have enough cash saved up for the used car, you do not have to apply for financing.