Why Used Cars are Better After Bankruptcy
Those who have recently gone through the bankruptcy process may believe that their chances to buy a used car are slim to none. However, despite the hit to your credit score you can receive a better effect of bankruptcy on auto loans and still land a reliable vehicle.
Bankruptcy Loans from Used Car Dealers
A big reason why buying a used car after bankruptcy is better has to do with they type of lenders you are able to work with. As a consumer you can usually choose between a tote the note dealership or a highly qualified bad credit loan company instead. Both lenders are known to finance used autos after a bankruptcy claim, but there are some slight differences.
Most tote the note car lots are able to provide used car auto loans to people use an in-house financing method, which means they supply the funds for your loan on their own. This tends to result in a credit check being overlooked and nearly guarantees your chances of loan approval.
On the hand a qualified bad credit lender is able to use its network of local dealerships that can provide the best loan rates. This gives you, the buyer, the chance to do less work through the loan process, while knowing that your past bankruptcy claim won’t hurt you too much.
Downside and Other Benefits of Bankruptcy Loans
Now as helpful as both of these lending methods can be, there is still a downside to these loans that you should beware of. That is that the interest rates from both bankruptcy loan companies will be higher than the conventional borrower. This is due to you being considered a high risk loan, and the greater the risk the higher the rates will be.
Luckily it is possible to improve your credit after bankruptcy to help save money on your used car rates and payments. It usually involves using a secured credit card or enlisting the services of a credit repair company. By making consistent timely payments and doing additional cleaning on credit report you can see improvement in your credit rating rather quickly.
So as a recap the benefits of buying used cars after bankruptcy include:
- Using tote the note dealers that do not conduct credit checks
- Working with a highly qualified dealer that provides the best rates from local dealers
- The ability to rebuild your credit with timely payments and credit report repairs
It’s also a good idea to keep in mind that a down payment or trade-in vehicle can go a long way in getting a bankruptcy used car loan with great rates.
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