Getting Car Loans After Bankruptcy: Three Factors Worth Considering

It is an obvious statement to say that bankruptcy is a situation which offers particularly difficult challenges. For a start, there is traditionally a stigma attached to being declared bankrupt, and for years afterward lenders are likely to reject applications. But these difficulties can be overcome, and when a new car is needed, for example, it is possible to get a car loan after bankruptcy.Admittedly, the idea of securing loan approval despite bankruptcy might seem strange. This is because credit scores are effectively ruined as a result of bankruptcy, with former debt wiped out without ever being paid.  But a gradual return to good credit status is possible when taking on one loan at a time.A car loan can play a critical role in rebuilding credit scores, and indeed financial credibility. But complete recovery requires some strategic thinking and patience. Until then, some compromises are necessary when applying for any kind of loan.Patience Is The keyPeople file for bankruptcy because of their inability to clear their debts, but the consequence of that move is a difficulty in getting loan approval again. Applicants do not want to have to face unbearable interest rates, but with credit ratings extremely low there is little choice. So, getting an affordable car loan after bankruptcy requires patience.There are many lenders willing to accommodate the specific needs of bad credit borrowers, even if they are bankrupt. However, these lenders usually use high interest rates to offset the added risk they are taking on. And while getting loan approval despite bankruptcy is a positive, the loan itself may become very expensive.Securing better terms means taking the time to improve the credit score before taking on a car loan. For example, a number of small payday loans could be taken out and repaid very quickly. After 2 or 3 months, the scores will have improved enough to see interest rates lowered, and a car loan should be easier to obtain.The Importance Of Employment And IncomeLenders are taking a major risk when they grant a car loan after bankruptcy, and for that reason, the interest rate is usually kept high anyway. Fortunately, there are other factors that can help to see the interest reduced.For example, a reliable source of income from a stable job assures the lender that the monthly payments can be made without fail. This can help applicants secure loan approval despite bankruptcy, with at least the practical issue of repayments satisfied.Logically, of course, income is a vital factor in an application for any loan, not just a car loan. But when the application is made after bankruptcy, the significance of income is greater. In many cases, it is the fact a reliable income is assured that swings the deal.Choosing A LenderMost traditional lenders prefer to ignore applications for a car loan after bankruptcy. The reason is predictable, with concern over repayments the universal excuse. However, those brave enough to see that borrowers are eager to rebuild their credit reputations, are more open to granting approval.Of course, securing loan approval despite bankruptcy is often dependent on who is applied to as much as how strong the application is. But by and large, online lenders are more willing to grant them because their loan products are specifically designed to cater to the needs of that niche market.Many online auto financing companies exist that specialize in car loans. These are superior to car financing schemes through the auto dealers, with lower interest so are more affordable. Refinancing the loan is also a viable option later on, if the need arises.