Car Loan after Bankruptcy: How to Recover and Get Approved
I think that we can all agree that filing for bankruptcy is not great for your financial situation, especially the aftermath, but the question is: will you still be able to finance car loans after bankruptcy in Ontario? We'll explain.
What is Bankruptcy?
This could be by liquifying some assets like second homes, or it could be by selling stocks and bonds. Or in extreme measures, it could mean repossessing your belongings. Once it’s done however the debt is clear and you theoretically start on a clean slate, however, it wouldn’t shock you to hear that most lenders aren’t overly inclined to a car loan after bankruptcy in Ontario. By the way, we don't care. You can get approved for a car loan with us no matter what your credit situation is like. Click here to get started.
New beginning: Bankruptcy used to be viewed as the end of someone's financial existence. Something that someone could never come back from. This is simply no longer the case. Anyone can file for bankruptcy (the average Canadian is only $200 away from financial difficulty). Thanks to new laws, people can start over. Anyone can recover from bankruptcy.
Once your bankruptcy is over, your trustee will provide you with a document that serves as your official discharge. This document is extremely important because you can't legally take on any new debts without it.
After you receive this document, this is when you can start to rebuild your credit.
Before you Apply for Car Loans after Bankruptcy
Check your credit report: Knowing what your report looks like and adding explanatory notes to potential issues will not only show you where you are, but a lender too. Knowing what your record says and adding a note to explain what happened can go a long way to helping you get a decent rate on your bad credit car loan.
Improve your credit score: Your bankruptcy will be included alongside any bad debts on your credit score for up to 7 years. Any lender will be very wary of offering you a large sum of money until you have proven that you have the ability to manage your money wisely.
Financing Car Loans after Bankruptcy
They will demand to know every single detail of your financial situation both before and after the incident and the exact situation which led to your filing for bankruptcy, if they don’t like your answers they may not grant the loan, and even if they do there will be a serious premium on it.
Bankruptcy and Low Credit score generally go hand in hand, so your only real option for loans will most likely be lenders who specialize in Poor Credit score loans. Like us! We don't discriminate and would love to help you find your next car loan in Southern Ontario.
The total amount you can take out will be severely limited, you will be able to take out a loan for a car but you will not be able to qualify for anything especially fancy.
How Long do You Need to Wait?
Time is also an important thing to consider, for one if you're trying to apply for a loan while the Bankruptcy filing is still underway that isn’t going to work out well for you. You want to put some serious distance between your bankruptcy filing and applying for a loan. 9 months to a year minimum.
Progress will be painfully slow but you can use this time to try and rebuild your credit. Making credit card purchases regularly and paying them off on time will slowly but surely start to rebuild your credit score. Bankruptcy will still look bad, but at least a rebuilt credit score shows you can still be reliable.
We’d love to help you find options for car loans after bankruptcy in Ontario. Click here to get pre-approved online today and we'll get the process started.