Post Bankruptcy Auto Loans: How Lender-Choice Can Ruin Your Deal

We know it does not need to be said, but it is always worth repeating: when considering a loan of any type, be sure to choose your lender carefully. The reason is that the terms offered are telling, and their reputation is extremely important. But when seeking post bankruptcy auto loans, the importance of lender-choice is even greater.It is not especially difficult to secure loan approval after bankruptcy, but it can be very difficult to secure good loan terms. Lenders take advantage of the fact that your recent credit history is so poor, and interest rates are raised considerably.In effect, a debt trap is laid out that a bad credit borrower, desperate to begin rebuilding their credit status, can so easily fall into. For this reason, taking care when seeking an auto loan is hugely important. But the good news is that there are options open to borrowers, and signs to help them steer away from danger.The Unique Problem With Buying A CarAmongst loan types, those used to buy cars stand out for some of the variations, options and problems that are commonly involved. A loan can be secured in more than one way: firstly, to secure a loan from a traditional lender; secondly, to get financing through the dealership; and finally, to approach one of the alternative lenders. Not all suit those seeking post bankruptcy auto loans.Many people get their financing through the dealership, mainly due to the convenience it offers. But this option is hugely expensive, with dealers adding as much as 3% on the APR to enhance their own profits. And because they warn that loan approval after bankruptcy is practically impossible, it seems there is no other choice.This is not true, so it is advisable to avoid getting financing through dealers. But it is equally important to take care when seeking an auto loan from any quarter because your status as a bankruptee means lenders will charge very high interest rates – sometimes unfairly high.   Finding the Right LenderThe task of finding the right lender is simplified with the development of the Internet, with comparison sites allowing a vast selection of options to be found within seconds. But never trust the recommendations they make completely. Read every detail of the post bankruptcy auto loans on offer then find out who the lenders are.Many online lenders offer great deals, including to severe bad credit borrowers, like those who have only just emerged from bankruptcy. As experts in their field, it would be hard to find better terms, and the likelihood of getting approval after bankruptcy is very high.Despite the high interest rates, the ease of approval makes them a huge attraction – not just when seeking auto loans, but any loan. This is mainly because the long-term advantage is to get back on the credit train, so to speak, and begin on the road to a strong credit reputation.Factors To Help Secure ApprovalOf course, finding a trustworthy lender is one thing, but securing loan approval is another. There are some factors that can help to strengthen your cause when applying for a post bankruptcy auto loan to buy your next car.Firstly, do not look for too much. Applying for funds to buy a top-of-the-range vehicle is pointless. It is best to keep things tight, and concentrate on rebuilding credit status than to spend big on new wheels. Remember, lenders are willing to take a risk by granting approval after bankruptcy – but not a big risk.If a loan application shows a concern to sticking within a tight budget, then the lender is more likely to feel confident the risk of defaulting is minimal. Then it is more likely the auto loan will be approved.