ple who had a bankruptcy on their credit report
were unable to get a decent car loan, if they were able to get
approved for a car loan at all. However, today, the rules have
changed. More and more lenders are offering car loans to people
who’ve filed bankruptcy. If you have a bankruptcy on your credit
report, and you’re looking to get a car loan, read this article
to find out three things you need to know about getting an auto
loan after bankruptcy.
Waiting Two Years Earns You Better Interest Rates
If you need to apply for a car loan earlier than two years
after the date that your bankruptcy went through, you’ll likely
get approved; however, your interest rates will be a lot higher
than they would be if you wait two years. After two years, most
lenders will see you as less of a risk, and you will qualify for
much better loan terms.
A Bigger Down Payment Makes You a More Qualified Borrower
When you apply for a car loan, your lender looks at something
called your LTV ratio. LTV is the amount of money you are
borrowing divided by the value of your car. For example, if
your car is worth $10,000, and you are borrowing $9,000, then
your LTV is 90%. 100% LTV’s are generally reserved for
borrowers with near-perfect credit. However, the lower your LTV
is, the more likely you will get approved for your loan. Most
lenders rarely decline loans with an LTV at or lower than 80%.
Some Lenders Specialize In After-Bankruptcy Mortgages
Some lenders specialize in loaning to people with either bad
credit or past bankruptcies. These lenders will not view you as
more of a risk than their other borrowers because all of their
borrowers are in the same situation as you are. Your best bet
is to shop online and compare interest rates and terms between
different lenders. This way you can be sure that you are
getting the best deal.
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