People that are trying to get bankruptcy auto loans are sometime confused as to where they should get a car. If they merely visit the normal car lots out there, they end up getting turned away when they attempt to get a car loan – because of the bankruptcy in their credit history. As we all know, this type of mark will dramatically decrease a person’s credit score.
Almost every financial lender out there will base their loan decision mainly on the credit score of the potential borrower. If you have declared bankruptcy at some time in your life, do not despair, there are a few options when it comes to getting bankruptcy auto loans. But it will take a little bit more effort and time.
Some Car Dealers Already Accept Bankruptcies
The most encouraging thing for people who have bankruptcies in their history is the way that many car dealers and lenders are willing to do business with them. In fact, we see more and more lenders actually advertising their willingness to accept them as borrowers. This approach is far different than it used to be even a few years ago. But you have to understand that major car dealers do not fall in this category. So if you have a bankruptcy and want one of their cars, you will need to furnish your own financing.
Of course, not every auto dealer offers financing anyway – this is nothing new. But those who do, typically advertise that they “carry our own paper”. You need to be mindful of how some these dealers operate when they offer their own financing. Often times, they will require a significant down payment, which is not unreasonable.
How Car Dealer Benefit from These Car Loans
One of their strategies is to acquire a down payment that is equal to the amount they have invested in the car. This way, they bear virtually no risk at all. Even if the borrower defaults on their payments, they repossessed the car and sell it again under the same terms. This is how many of them can afford to offer bankruptcy car loans.
This car dealer strategy is not necessarily an evil thing, but it helps to understand what their needs are. It is really just a matter of whether or not you like a certain auto and whether or not you can accept the terms of the sale. This is a classic win-win for both parties.
However, you still need to do some homework about a potential car dealer and lender to make sure they are reputable. Never forget the fact that there are unfortunately some companies out there who will rip you off and leave you hanging. So make sure you understand what your rights are. Many companies like to beat people down for having bankruptcies in their histories, in order to get them to settle for bad terms – if you sense they are trying to do this to you, leave immediately.
You will find that interest rates on a bankruptcy car loan will vary from lender to lender. This is actually a good thing for people who are willing to look at many different companies. This is smart and it allows you to take advantage of the competition.
One last thing that should be addressed here is the reason for the bankruptcy. If there is a specific reason for your bankruptcy such as an illness or another significant event, then often times you can get much more favorable terms. If this happened to you, then ensure that your lender knows this.
Regardless of how you get your auto loan and the terms you get from your lender, use this loan to get your credit score back on track. Make sure that you get a payment you can really afford and make those payments on time.
Read more here about bankruptcy auto loans: https://www.usa.gov/debt