Bad Credit Car Loans
Welcome to Second Chance Auto Finance, central New England’s number one source for subprime car loans. Why Second Chance Auto Finance? First of all we are a local dealer that specializes in auto loans for people with bad credit. We are not a lead generating company that collects your credit information and sells it to multiple dealers in your area that “shotgun” your credit application to many banks, credit unions and finance companies with little or no results that ruins your chances for getting a loan for a long time! The same holds true going from dealer to dealer hoping for different results with a flawed strategy. Too many inquiries on the credit bureaus ruin your chances of getting a loan. Second Chance Auto Finance is here to help you every step of the way in getting your next car. With some money down and a few simple documents everyone has, you stand a really great chance of getting approved.
Can I get a car loan with bad credit?*
It’s a common question, and a look at some figures provides useful context when you need an answer.
Nearly one third of Americans have bad credit, amounting to some 68 million consumers, according to Experian, a national credit bureau.
With that in mind, you may not be surprised to learn there are many lenders that will consider car loans for people with bad credit. Each applicant’s position is different, however, and whether you can get an auto loan yourself will depend on your own set of circumstances.
But now you know you may have options, let’s explore them.
How to get a car loan with bad credit
Banks, credit unions, finance companies and dealerships are all popular options for consumers seeking subprime auto loans. Financing is also available to many people at “buy here, pay here dealerships,” where a monthly payment is made directly to the auto dealer, but the Consumer Financial Protection Bureau (CFPB) cautions that interest rates on such loans can be higher than those of other lenders.
Rather than addressing financing for your next vehicle when you’re already at the dealership, consider getting preapproved from a lender like Second Chance Auto Finance before you go.
Preapproved cars loans for people with bad credit may help the auto-buying process in a number of ways. You can compare terms between lenders, shop for a vehicle like a cash buyer once approved, and concentrate on negotiating the best price for your car when you’re at the dealership.
But before you apply, check your credit. The CFPB encourages consumers to check their credit reports for errors or inaccuracies that might limit their access to credit and the best possible auto loan rates.
Plan ahead, too, says the bureau, by budgeting what you can afford. Second Chance Auto Finance auto loan calculators, which estimate total loan amount and monthly payments, may help with this. These calculators are also designed to help you see what effect a down payment or trade-in amount, loan terms and interest rates may have upon a potential loan, and what you’ll pay in total. For example, a longer loan term may lower the monthly payment, but you might pay more for the vehicle over the life of the loan when interest charges are taken in to account.
The process for buying a car after bankruptcy
Filing for bankruptcy and wiping out your credit score, as well as your debts, can be stressful. On top of that, attempting to make a major purchase like buying a car can seem daunting.
But here’s some positive news. Getting a car loan after bankruptcy is possible in many cases. You’re not the only one to go through the bankruptcy process, and there are lenders ready to consider the financing needs of consumers in this situation.
How long after bankruptcy can I buy a car?
Most people filing for bankruptcy file for a type called Chapter 7, in which the debtor’s non-exempt assets are sold and the proceeds given to the creditors. Filing for Chapter 7 bankruptcy takes about 120 days, or four months, until the case is closed and the debts are erased. The bankruptcy can then stay on the debtor’s credit report for up to 10 years.
The other main type of personal bankruptcy is Chapter 13, designed to enable people with steady incomes to hold on to property that might otherwise be lost through the bankruptcy process. A plan is created for the debtor to pay all or part of their debts to creditors over three to five years. A Chapter 13 bankruptcy may stay on the debtor’s report for up to seven years.
You don’t necessarily have to wait years to buy a car, but consider spending some time to rebuild your credit before applying for a car loan after bankruptcy. Debt.org, a debt-help organization, recommends applying for a secured credit card, and paying it off each month for 12 months, before moving onto an unsecured credit card and seeking a car loan. A positive credit history will help your credit score, which is a key factor in determining whether you will qualify for an auto loan, and what interest rate you might get, says the Consumer Financial Protection Bureau (CBPB). The longer the history, the more information there is to potentially improve how you are seen as a credit risk, says the bureau.
Getting a car loan after bankruptcy
- Do your homework. The CFPB urges consumers to check their credit reports before applying for financing. Look out for errors that may count against your auto loan application. You can request a free copy of your credit report from each of the three major reporting agencies once a year, and find details of how to do that at the CFPB website.
- It may help to budget and work out how much car you can realistically afford. Estimate your total loan amount with an affordability calculator, and familiarize yourself with how different interest rates and loan terms affect potential payments with the monthly payment calculator.
- Compare lenders. Even post-bankruptcy, there may be numerous options to consider when looking for financing, enabling you to compare loan rates and terms. While it might be possible to get approved for a car loan after bankruptcy, you need to be prepared for a higher interest rate or potential down payment requirement than you may have received had your credit been perfect. This might be the case even if you have a high income.
- Getting preapproved for your financing may also help your position when buying a car after bankruptcy. If your application is approved, you’ll have the benefit of knowing the terms of your auto loan, like interest rate, loan amount, monthly payment and loan duration, before shopping for a vehicle. Besides streamlining the financing process, it enables you to focus on trading in and choosing a vehicle at the dealership, says the CFPB. Second Chance Auto Financing is a direct-to-consumer auto lender that enables qualified applicants to get preapproved online. Applying for a car loan after bankruptcy takes just minutes, and you’ll receive a decision in seconds.
- If a lender approves your application, you can begin shopping for a car. As your credit history has taken a hit, bear in mind that the loan amount may only be large enough to buy a used vehicle.
- If you’ve been approved for a loan by Second Chance Auto Finance, there’s more good news. Second Chance Auto Finance works with a nationwide network of dealers offering used and new vehicles meeting our requirements for age, mileage and financing. We’ll recommend local dealerships within your loan packet, and our dealer locator tool will also help you pinpoint dealerships nearby. Take your loan documents along to the dealer and, once you’ve closed the deal on your car, the dealership staff will work with us to complete the transaction.
Auto loans after bankruptcy may build your credit
Besides the benefits that come with having your own car, making timely payments on a car loan after bankruptcy will help you build your credit, as long as the lender reports the activity to the main credit reporting agencies, states the CFPB. And if your credit history improves over time, there may be options to refinance your loan.