Post-Bankruptcy Auto Loans: A Path to Successful Loan Application

Bankruptcy is often the end of all your debts, but not the end of the world. While bankruptcy leaves an ugly scar on your credit profile that may only be completely healed 7 or ten years later, it does not prevent you from borrowing again. You should not expect to be approved for any loans or lines of credit before you bankruptcy is discharged, as well as forget about credit cards and personal loans shortly after. Despite above, secured borrowing options are available to consumers after bankruptcy to include mortgages, collateral-based personal loans, secured credit cards, and auto loans. They do come at a hefty cost to the borrower, as lenders try to limit the risk of lending money to people with serious credit issues in form of increased rates, smaller loan amounts, and significant loan fees. While most traditional lenders would refrain from lending money to people with fresh bankruptcy on their record, some non-traditional lenders would approve post-bankruptcy loan applications.Borrowing after Bankruptcy Is Hard, Yet FeasibleAn encouraging introduction may have made you feel like you may walk into a dealer and get approved right on the spot. The truth is slightly more cynical: you may be approved for a loan after doing some preparation and research. Since you already have a major drawback in form of bankruptcy on your credit record, you have to make sure that other things that lenders consider when making approval decisions are impeccable.First, you have to show a track of regular income coming in every month and a record of steady employment. The longer you had uninterrupted employment, the better. If you only have been employed for a couple of months, you may postpone your auto loan shopping quest for a month or two, as most lenders would require you to stay a minimum of 90 days with the same employer preceding your loan application. Second, since you have nothing to boast in terms of creditworthiness, a potential lender may request your bank records.Typically, what lenders look for in your bank statements is financial stability. They examine your starting and ending balances, overdrafts, returned items, and so forth. What you need to show is that you spend less than you earn and manage your finances responsibly. Another thing you need to show is a stable residency. Living at the same place for years is the best proof of it, as lenders do not like rapid changes in consumer behavior, as it poses higher risk. You may be required to present a letter from your lender, stating how long you have resided at your current address and how timely your rent payments are. If you managed to keep your home after bankruptcy that is even better. Above should be sufficient preparation steps to ensure a successful auto loan application after bankruptcy.Finding the Right Lender Is More Important than Anything Else IsOnce you have everything straightened out, you need to find the right lender. Applying erratically at banking offices and car dealerships would not do you any good, but also worsen your situation, as multiple inquiries would further reduce your credit score. The best way to secure a bad credit auto loan is to apply with online lenders and loan brokers. Non-traditional lenders are prepared to undertake higher risks that bad credit loans carry and put specific financing programs in place to assist poor credit car buyers. Loan brokers have necessary industry connections to match you with the lender that would be capable of approving your application. Therefore, if you need to get an auto loan after bankruptcy, your best bet is applying online with specialized financial institutions.