
What is Bankruptcy? - Bankruptcy is a complex legal process in which a person can seek relief from their debt. Chapter 7 also known as “straight bankruptcy” often sees the liquidation (selling) of assets to pay a debtor. Alternatively, chapter 11 leads to a negotiated payment plan with debtors. While bankruptcy may be the only way out for some, it will have lasting effects on your credit.
How does bankruptcy affect my credit? -Bankruptcy will most certainly have a negative impact on your credit score but the effects can vary based on a number of factors such as the state of your credit before bankruptcy and the number of accounts closed. Bankruptcy can be a powerful financial tool for those who need it, but recovering from its effects on your credit can often feel like an uphill battle.
Below are the top 5 ways to get an auto loan after bankruptcy
1. Understand Your Credit Score
The first step to any financial decision is understanding, well, your standing. Getting your credit report can help prepare you for what to expect at the dealer and help you understand how bankruptcy has affected your credit. If you already have your credit report you can learn how to read it here.

Many sites and services offer to give you a FICO credit score, but in order to get your full report, you will need to contact one of the three major reporting bureaus: TransUnion, Experian, and Equifax. Each individual is entitled to one report from the three credit bureaus every year. Click here to learn how to get your free credit score.
2. Down Payment and Trade
If you have ever been to a car dealership you may have realized that banks, and therefore salesmen, love down payments. This is because a cash down payment lowers the principal amount borrowed, making you more likely to be approved for a lower amount. If you already have a vehicle and simply need an upgrade, your current car can be traded in at the dealer for a cash value that acts as a down payment, lowering the amount borrowed.

Most financial advisors recommend putting no less than 20% down when purchasing a vehicle. However, this is often not obtainable for the average consumer. The dealer will likely accept any amount but down payments less than $1500 are unlikely to affect your terms of approval or have a noticeable impact on your payment.
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3. Use a “Buy-Here, Pay-Here”
If you can not get approved through a traditional lender, or the interest rate is too high, a buy-here-pay-here lot may be a good option. Some auto dealers have their own in-house financing and do not require third-party approvals from banks in order to offer you a loan. This can be a great way for someone with less-than-perfect credit to get a vehicle and get re-established.

Some buy-here, pay-here lots report to credit bureaus, however, some will not require a credit check at all and may simply verify your residency and income. BHPH lots may also require a down payment however, they are often more manageable than traditional bank loans.
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4. Build your credit
If you are not quite ready to get an auto loan, or you think that your interest rates are too high, you may want to take some smaller steps to raise your credit score. Credit Cards, personal loans, and jewelry can all contribute positively to your credit history. If you can not get a credit card or installment loan then you may want to consider a secure credit card or becoming an authorized user on a family member's account.

There are many tools and resources for improving your credit without a large loan. Staying aware and involved with your credit is the key to success. To learn more read our article 3 Ways to Improve Your Credit Fast.
5. Wait and Save
Rose Kennedy said time heals all wounds. Credit is no different. While bankruptcy can often be devastating for your credit it is, ultimately, temporary. A bankruptcy will be removed from your credit after 7 years if you filed chapter 13, and 10 years if you filed chapter 7. Sometimes an auto loan is more expensive than it is worth. A little time, a good down payment, or some new positive history will make all the difference. Sometimes good things come to those who wait.

Getting pre-approved online can also give you an advantage over shopping dealers directly. Getting pre-approved online allows you to focus on your vehicle rather than your loan terms and can save you the embarrassment of being turned down in the showroom. to find out if you qualify you can compare auto loan offers online.
Shop Auto Loans Online: Bad Credit, Special Finance, No Credit, Bankruptcy, No Money Down, Repossession.
Read More:
-Understanding Your Credit Report and Score
-How to Get Your Free Credit Report and Score
-3 Ways to Build Your Credit Score Fast