Many Americans who have endured bankruptcy wonder what their capability to borrow money afterward is. Often, the biggest question is whether they can buy a car, which is needed to get to work or school and keep the family functioning.

Many experts say that the answer is yes.

Securing auto financing after bankruptcy can be tricky, but it’s possible with the right approach. While lenders may be cautious about approving funding for individuals with bankruptcy on their record, many still offer options. However, credit-challenged borrowers should expect higher interest rates as lenders see an increased risk.

Waiting may be a good idea

One of the most common questions is how long after bankruptcy you can apply for auto financing. While the answer could be as short as six months, most experts say the decision requires heavy consideration.

These same experts recommend buying a car with cash (perhaps a used vehicle from a reputable dealership) or waiting until your credit scores improve. Waiting to buy gives you time to build a stronger credit profile, which can increase your chances of securing financing with better terms and lower interest rates. Improving your credit before applying for financing can significantly affect affordability and long-term financial stability.

One way to learn whether you can obtain financing is to get pre-qualified. This process allows you to address financing before you go shopping to look at cars. Pre-qualify online in just minutes with Credit Acceptance and learn how much you might be pre-qualified for.

Different types of bankruptcy

Several types of bankruptcy apply to individuals, including Chapter 7 and Chapter 13 (both named for sections of the U.S. Bankruptcy Code). These two options impact one's ability to obtain financing and buy a car:

• Chapter 7 bankruptcy
  Takes between four to six months to complete. Once the process is finalized, a discharge notice is usually issued about 90 days after the creditors' meeting. You’ll need to hold off on auto financing until you’ve received this notice.
• Chapter 13 bankruptcy
  Lasts between three to five years and involves a structured repayment plan. During this time, you must obtain permission from the bankruptcy court to purchase a vehicle.

Regardless of the type of bankruptcy, delaying a vehicle purchase may be your best solution. The more time that passes after a bankruptcy discharge, the greater the chance of securing an auto financing with a lower interest rate and more manageable monthly payments.

For those who cannot wait, a good first step toward buying a car is to get pre-qualified for auto financing. Start the process with Credit Acceptance today and see how much you pre-qualify for.