How to Get Approved For a Car
Loan after Bankruptcy |
By L. Sampson |
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Years ago, people who had a bankruptcy on their credit report were
unable to get a decent car loan, if they were able to get approved
for a car loan at all. However, today, the rules have changed. More
and more lenders are offering car loans to people who are filed
bankruptcy. If you have a bankruptcy on your credit report, and
you're looking to get a car loan, read this article to find out
three things you need to know about getting an auto loan after
bankruptcy.
Waiting Two Years Earns You Better Interest
Rates
If you need to apply for a car loan earlier than
two years after the date that your bankruptcy went through, you'll
likely get approved; however, your interest rates will be a lot
higher than they would be if you wait two years. After two years,
most lenders will see you as less of a risk, and you will qualify
for much better loan terms.
A Bigger Down Payment Makes
You a More Qualified Borrower
When you apply for a car
loan, your lender looks at something called your LTV ratio. LTV is
the amount of money you are borrowing divided by the value of your
car. For example, if your car is worth $10,000, and you are
borrowing $9,000, then your LTV is 90%. 100% LTV's are generally
reserved for borrowers with near-perfect credit. However, the lower
your LTV is, the more likely you will get approved for your loan.
Most lenders rarely decline loans with an LTV at or lower than 80%.
Some Lenders Specialize In After-Bankruptcy Mortgages
Some lenders specialize in loaning to people with either bad credit
or past bankruptcies. These lenders will not view you as more of a
risk than their other borrowers because all of their borrowers are
in the same situation as you are. Your best bet is to shop online
and compare interest rates and terms between different lenders. This
way you can be sure that you are getting the best deal. |
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