Before the global financial crisis, going bankrupt was often viewed as the end as far as getting credit goes. Once lenders realized that everyday people were being caught up in the world’s financial issues through no fault of their own, that attitude changed. While still something that needs explaining, bankruptcy is no longer a barrier to getting a car loan.
Apparently, 1 in 6 Canadians will file for bankruptcy at least once in their lives. Lenders have had to come to terms with that and learn to work with it. You will end up paying more for a loan if you have filed but it is no longer the end as far as getting finance is concerned.
Car finance and bankruptcy
A lender will typically treat someone who has filed for bankruptcy the same as someone with poor credit. Once your financial affairs have been normalized, you can apply for loans the same as everyone else. You may not be able to use the same variety of lenders that everyone else can but lots of lenders will still work with you.
It’s important to manage your expectations though. You may not be able to finance a luxury car. You may need to put down a larger down payment and you will pay more interest.
You should complete the bankruptcy process or formalize your consumer proposal before applying for credit. You should also be prepared to discuss the details of your situation, including reasons for your filing for bankruptcy and potentially, the measures you have put in place to avoid it happening again. It won’t be an interrogation but a lender will need to know how much of a risk you pose.
While it may be painful, you need to check your credit score before attempting to secure finance. This is what lenders will use to judge your viability and risk so you should have a good idea of what to expect. The score will influence the amount of credit you can achieve, the type of lender who will work with you, the interest rate charged and any special terms imposed.
Once you have an idea of your credit score and your financial situation has been normalized enough to think getting more credit is safe, it’s time to approach a lender. Car Nation Canada works with a range of lenders who work with people in all kinds of situations, including those who have been bankrupt, people with low credit scores and those trying to rebuild their credit. We can surely find you a great deal regardless of your situation.
Getting a car loan after bankruptcy doesn’t have to be painful or difficult and doesn’t have to be overly expensive. By working with the right people who can find you a good deal, you could be driving your new car and rebuilding your credit score at the same time!