Bankruptcy is no longer perceived as unfavorable as it used to be, but it still negatively impacts your credit rating. See what steps you should take in order to get a used car loan after a bankruptcy, and understand how long the process might take.
How a Bankruptcy Impacts Your Credit
When it comes to your credit score, a bankruptcy is not the end of the world. But, your score will definitely take a hit. How you respond to that hit will make a big difference in how fast you’ll be able to recover from it and how long it will take to get things back to normal.
Guaranteed to Lower Your Score: You can expect a decrease in your credit score of 130 to 240 points, depending on where your score was before the bankruptcy. If you had fair credit before, this might be enough to put you into bad credit status. If you had bad credit before, it may lower your score less than it would if you had fair credit, but it could still drag you down to the ranks of really terrible credit.
Decreased Lender Confidence: When a traditional lender sees that you have a bankruptcy on your credit report, they may wonder if you will default on your loan and file for bankruptcy again if they loan you any money.
However, if you go to an alternative lender that is familiar with assisting people with bad credit, they will be used to seeing these situations similar to your own. They will be much more willing to loan money to those with a bankruptcy in their past.
Life After Bankruptcy: Getting an Auto Loan
One of the loans that can help you get back on track after a bankruptcy is a used car loan. They are generally easier to get than a mortgage or an unsecured credit card, and they can help you re-establish yourself in the eyes of lenders.
Building Back Up: The road to recovery begins with you, and you should start right away to build your credit back up in spite of your bankruptcy. Now is not the time to give up on your credit, but to take your credit to new levels.
You can only control what you have in your power. Rather than focusing on the bankruptcy, you should choose to focus on the parts of your credit that you can do something about—like making on-time payments and ensuring that you don’t use all the credit you have available to you.
Finding the Right Deal: The last thing you want to do is end up in a bad car loan after a bankruptcy. Make sure you are getting a used car at a price relative to its value. Also, ensure that you get multiple opinions regarding the car’s value so that you are not paying too much from the start.
Having a Plan: Having a good plan for how you will turn your credit around is key. Make a strategic purchase with your next car loan, and have it work for you instead of against you. You might just be surprised by how easy things can be and how fast the process can go when you have it all planned out.
The Right Mental State
Going through a bankruptcy is hard, and it can really make it difficult to think positively about your credit situation. You may feel like you don’t deserve a new ride, worried that you won’t be able to handle a new loan, or fearful that the cycle will repeat itself again.
But, driving a car that makes you happy can really help turn things around and get you into a positive mental state—not just about the bankruptcy, but about life in general. If you work the deal properly, you can use something as simple as a used car to propel your credit and turn things around, so your bankruptcy stays in your rearview and you can get on with your new life.
Don’t Give Up!
If you’ve been trying to get a used car with a bankruptcy on your credit report and haven’t had any luck yet, don’t give up! Sometimes it just takes the right dealership to be able to construct the perfect deal for you. Stop into Ride Time today, and we will help you get financed—even with a bankruptcy.