Buying a car after bankruptcy may seem like an impossible feat, but it’s not. While having a bankruptcy on your credit report can make it tougher to get approved for financing, there are still ways you can get credit approval to purchase a vehicle. But first, let’s take a look at how bankruptcy can impact your credit history.
How does bankruptcy impact my credit history?
There are two types of bankruptcy you can file as an individual: Chapter 7 and Chapter 13. With Chapter 7 bankruptcy, some of your possessions and property can be liquidated to repay outstanding debts (and certain debts may be discharged altogether). In a Chapter 13 bankruptcy, you set a plan with the court that allows you to repay all or part of your debt within three to five years.
According to credit reporting companies Equifax and Transunion, a bankruptcy can stay on your credit report for seven to 10 years. The good news is the impact should lessen over time.
How can I get approved for financing to purchase a vehicle after bankruptcy?
- Before car shopping, determine what you can afford.
Putting together a budget and savings plan is a good way to determine how much car you can afford. You can do this by reviewing your current expenses and calculating how much you already have or need to save for purchasing a vehicle. When determining what you can afford for your monthly payment, it’s also a good idea to include car insurance and maintenance costs to help avoid surprise costs.
- Find a car dealer that will work with you.
It’s important to find a car dealer that can offer you a car loan or auto financing for your credit situation. There are many dealerships that offer subprime auto financing to credit-challenged car buyers in need of credit approval to purchase a vehicle. Credit Acceptance works with a network of more than 12,000 enrolled dealers across the United States that can offer credit approval on reliable new and used vehicles to every car buyer.
- Work on rebuilding your credit history.
After purchasing your vehicle, you can start rebuilding your credit history by making on-time car payments. Credit Acceptance is an auto finance company that works with dealers and allows them to approve credit-challenged car buyers for vehicle financing. Since Credit Acceptance reports to the three major credit reporting bureaus, customers can improve their credit history by making on-time car payments.
If you have a bankruptcy filing in your credit history and are in the market to purchase a vehicle, a dealer enrolled in the Credit Acceptance auto finance program can help! Simply fill out the form on our website to get connected with three enrolled dealers near you that can help you start your credit approval today!
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