Car Loans After Bankruptcy – When to Apply

Every American who has endured a bankruptcy knows that it is a credit rating downer that will hang around up to ten years, depending on the type of bankruptcy pursued (Chapter 7 or Chapter 11). A bankruptcy can reduce a credit score by one-hundred points or more, bringing down the consumer a couple tiers of creditworthiness. And they will experience the blues when they approach conventional lenders, banks and credit unions, and are abjectly turned away with little consideration.

Interest Rate Red

Waiting the seven to ten years for the bankruptcy to finally drop off a credit rating is not necessary. Wait about six months. During that time it would be wise to limit any financial activity that would show up on a credit report. Unless it is something positive such as getting a secured credit card and keeping payments current. When a consumer finally approaches a lender who will finance bankruptcies, they will probably see red when learning the interest rates they must endure.

Going for the Green

Landing a bankruptcy car loan is a tremendous step. Even though the interest rates will be high, it is an opportunity to start rebuilding your credit, provided the monthly payment obligation is met. Another way to remove the tarnish on your credit rating is to obtain a secured credit card. These instruments were created to help those with poor credit ratings get back on an even credit keel. The plan requires depositing an amount of cash in a financial institution, a bank or credit union. The amount of the deposit dictates your spending limit.