How to Get a Car Loan After a Bankruptcy

By: Jason Lancaster..

Filing for bankruptcy, while often a good idea, is usually considered "financial suicide". In fact, a lot of people believe that bankruptcy will lead to 7 years of bad credit and embarrassment. Some even think that they'll never be able to buy on credit again.

This is NOT true.

The truth is, if your bankruptcy is discharged, re-establishing credit can be done in as little as twelve months. As long as you know how the US credit system works, you can restore your credit quickly and painlessly.

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.

You'll need to save as much cash as possible as quickly as possible. You need cash to get a secured credit card, for a vehicle down payment, and also for an emergency fund. You also need to hoard all of your financial documents. That means your bankruptcy paperwork, your bank statements, pay stubs, and all of your bills. Keep them organized and in a safe place because future creditors may ask for copies.

3. Get a secured credit card.

Secured credit cards are a great way to get your credit back on track. Just make sure you don’t use them more than once. That's right, get a secured credit card but use it only once. Pay it off the first month you get a bill. Once that first payment is made on time, the credit bureaus will report that you're making payments. Then destroy the card. Even if the card is no longer being used, the credit bureau will still show that you're making payments on time and you will be building credit.

4. Buy an inexpensive pre-owned car.

Believe it or not, buying a car after a recent bankruptcy can be done. But you need to know a couple of things first: this car isn’t going to be the car of your dreams. The car of your dreams is probably too expensive. If the first car you buy after bankruptcy is something cheap with good resale value (like a small car or small SUV) you can trade it in a year and get a car you'll like. Also, you've got to have a down payment saved up.

5. Get more credit.

If you have a secured credit card (or two) for a few months and your car payment has been paid a couple of times you probably qualify for a regular, unsecured credit card. Make sure to apply for a card from the big names like Visa, MasterCard, or Discover. Whatever card you get, it's important that there is no annual fee. You should also try to get a credit card from your local credit union. If your application is denied, that's OK. Most denials are based on computer analysis which is often incorrect. Simply call the credit card company and ask them why you were denied and what you can do to get approved. Often times your denial will be overturned.

6. Buy the car you want.

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: http://www.articlepro.co.uk/international

Author Jason Lancaster has many years of knowledge & experience in the auto industry. He's helped hundreds get a car loan after bankruptcy and has knowledge & experience working with creditors for bankruptcy car loans.
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