Need a car? You can get a loan after bankruptcy
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If you’re deep in debt you can’t afford to pay, then Greensboro bankruptcy might be the best option for you. However, a question we are frequently asked by clients considering bankruptcy is whether they’ll be able to get credit after they file, particularly a car loan or mortgage. It can take longer to qualify for a mortgage after you file bankruptcy, but a car loan is something that can happen much sooner. Here is what you need to know.
Once Your Debts Are Discharged, You Can Get Credit Again
Your credit score will drop when you file bankruptcy but can begin to rebound after your discharge. Depending on what your credit score was before filing bankruptcy determines how much you’ll have to pull it up before you can get new credit. In some cases, you might begin getting credit offers in your mailbox within just a few weeks or months of your Greensboro bankruptcy discharge.
But why would creditors take a risk on someone right after they filed bankruptcy? The answer is two-fold. First, because you’ve recently discharged all (or most) of your debt, you’ll be better able to pay them for new credit. Second, because you just filed bankruptcy, creditors know you can’t file bankruptcy again for several years to come, so they face no risk of you discharging your debt this way.
Beware Getting Credit Too Soon
There is no time barrier to getting new credit after your bankruptcy case is discharged. However, the sooner after your bankruptcy you get an offer or approval of credit, the less favorable the terms. If you’re desperate for a car and can’t wait, you might be able to be approved for a car loan within just a few months of your Greensboro bankruptcy, but you won’t get a great interest rate.
Also, the sooner after bankruptcy, the more likely you’ll need a down payment. With excellent credit, you can qualify for a no money down, low-interest rate loan for an auto. But with credit that’s coming off the impact of bankruptcy and you’re just starting to rebuild, you will have fewer options. However, if you must have a car and can’t pay outright for one, you may have no choice.
What to Do If You Must Take an Unfavorable Loan
If you’re just out of bankruptcy or about to file and need a car, you might have to accept the best financing you can get. However, you want to avoid the trap of a buy-here-pay-here car lot since those charge exorbitant interest rates and can get you right back into financial trouble. If you belong to a credit union, that’s a good place to start for financing.
Larger reputable dealerships sometimes offer special programs for buyers that need a fresh start. Another option is to ask for a personal loan from a family member that you pay back with interest. Alternately, perhaps a close friend or family member would co-sign an auto loan for you. If you must take a loan that has higher interest, you might be able to refinance later for a lower interest rate.
Other Options to a Car Loan After Bankruptcy
If possible, it’s wiser to wait to rebuild your credit before you get a car loan after your Greensboro bankruptcy, but that’s not always possible. If you live near public transportation, you might be able to postpone. Ride sharing and carpooling is another option. Finally, Uber offers a program to help people rent, lease or buy a car if you drive for them. They take the car payments out of your earnings to mitigate risk.
There are options available if you must buy a car soon after your bankruptcy discharge, but the better option is to rebuild your credit before applying for a car loan. To find out more about the benefits of Greensboro bankruptcy, contact the Law Offices of John T. Orcutt today. Call +1-888-234-4190 now to schedule a free North Carolina bankruptcy consultation at one of our convenient locations in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington.