Is Buying a Car After Bankruptcy Possible?

If you’re wondering if buying a car after bankruptcy is possible, the short answer is yes, However, it’s a difficult process that you shouldn’t jump into unprepared. Your credit is going to be damaged from the bankruptcy. This means most traditional lenders will be unwilling to work with you. This leaves you with few real choices for financing at a good rate. You need to be aware of this when starting your car search, and realize from the outset that your options will be limited. However, this does not mean you have no options at all. With a little research and perseverance, you can definitely buy a car.

Is there an Upside to Declaring Bankruptcy?

Obviously, you declared bankruptcy for a reason. You were unable to pay all of your bills with the money you were making. This will be a strike against you in the eyes of lenders, but there’s also an upside to it. After going through a bankruptcy, your debts will likely be discharged, meaning you no longer legally owe them. This frees up a lot of extra monthly income for you, which can be used to pay a car payment. Lenders will take this into consideration. After all, their primary concern is your ability and willingness to pay them and to do it on time each month.

Your Best Options for Purchasing a Car After Bankruptcy 

Your two best bets for buying a car after bankruptcy are car lots with in-house financing and rent to own car dealers. Those lots that provide in-house financing will have much lighter credit requirements than other dealers, and some may have no credit requirements at all. As long as you can prove you have the income to repay the loan, you’ll get your financing and your car.

Points to Remember when Getting a Car Loan after Bankruptcy

Just remember the rates on your interest will probably be higher than if you’d been able to get a traditional loan. With a rent to own program, you take possession of the car without a credit check, and sometimes without an income check. You just make a down payment of between $500 and $1,500 and agree to make monthly payments on the car for a certain period of time, and it’s yours. These programs are few and far between, but they DO exist in many larger cities, so they’re worth searching out. They could mean the difference between driving your own car to work and taking the bus.