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Get Approved for a Car Loan After a Bankruptcy

By: Jason Lancaster

When you file for bankruptcy, a lot of people will tell you that re-establishing credit will take years. They'll also warn you that you'll be unable to buy anything on credit for a long time, and that your credit history will be permanently damaged.

These are all lies.

If your bankruptcy is now complete, you can re-establish your credit in one year. By using the credit system you can fix your credit and restore your credit score quickly and easily.

1. Get it together.

You want to create a budget and make a savings plan. It's very important you come up with a savings plan that you're going to follow. You also need to make sure that any creditors who send you collection notices are taken care of right away. You can't ignore these notices just because they're for debt that was included in your bankruptcy. Contact the creditor and make sure they know so they don't file a new collection and stop the re-establishment process. Last, make sure you know why you filed for bankruptcy and how you're going to make sure it doesn't happen again.

2. Start hoarding cash and saving paperwork.

This is the hardest part -- you need to save up a few thousand dollars. Mostly, this money will be your emergency fund that you can use to make payments if you have a problem. But some of this money will be used to get a secured credit card and for a vehicle down payment. You also need to keep all of your important financial documents like pay stubs, bank statements, bills, etc., because a creditor may ask for copies in the future.

3. Apply for a secured credit card.

A secured credit card is an excellent tool for re-establishing bad credit. First of all, as long as you have enough cash for a deposit, you can get a card. Secondly, they're considered credit and they'll help you build some positive credit history. But whatever you do, don't carry a balance on your new secured credit card and don't use it more than once. In fact, you want to use the card one time and then cut it up. That way, you'll still be getting credit and your credit report will show that you're a disciplined credit user.

4. Buy an inexpensive pre-owned car.

I know that the idea of buying a cheap used car (2-4 years old, less than $10k) may not get your motor running, but remember the goal here is to re-establish quickly. You want to make a few payments on this car (6 to 12) and then trade it in for something nicer. Just make sure you have a down payment before you go shopping.

5. More credit cards.

Now that you’ve bought a car and you have a secured credit card, it’s time to get some unsecured credit cards and to start working with a local credit union. Apply for the Discover card, any Visa or MasterCard (as long as there isn't an annual fee), or any credit card offered by your credit union. Most importantly, if your application for a credit card is denied, call and ask WHY. Because most applications are denied by computer, you can often call and get a denial overturned.

6. Get the car you like.

The goal — you can now get the car you want after your bankruptcy. If you’ve followed all of the previous steps, you will have a good credit history AND a good credit score. Buying the car, truck, or SUV you want is now firmly in your grasp.

While re-establishing credit after a bankruptcy is fairly easy, it's also easy to slide back into a bad credit pattern. Make sure that you are always saving money -- if you have savings, you have options. Also, take a look at your life and your spending and compare it to your habits before you filed bankruptcy. Are you doing some of the same things as before? If so, make a change. While re-establishing after your first bankruptcy is simple, re-establishing after a second is very difficult.

Article Source: Main Articles

Author Jason Lancaster has many years of experience in auto finance. He has helped hundreds get a car loan after bankruptcy and knows how the credit system works for bankruptcy car loans.
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