A bankruptcy will harm your credit. However, it is still possible to get auto financing after a bankruptcy. The more current the bankruptcy the more it hurts you.
If it is possible, it is better to re-establish your credit before applying for another car loan. By doing this you can usually get a better interest rate and terms on your loan.
If you need a car right now then it is best to start saving your funds for a down payment and apply to the lenders who can help you get an auto loan after a bankruptcy.
Loan-To-Value Ratio
The amount of money you wish to borrow is determined by the loan-to-value ratio of the vehicle you want to buy. Your credit history and the percentage of the amount of money the bank will lend you determines how much you can borrow.
Someone with poor credit may only get a 60 percent loan-to-value ratio whereas someone with excellent credit can get a 120 percent loan-to-value- ratio. For this reason you may have to put more money down to get your car loan.
It's a good idea to start saving money for the down payment. If you end up with a high interest rate because of your low credit score, you may not be able to borrow as much as you want.
Subprime Financing
If you can't get traditional financing you may have to apply to a subprime lender who specializes in high-risk loans. Always consider your budget and how much money you have to put down before signing on the dotted line. It's always good to work with someone who is familiar with these type of loans so they can walk you through the process.
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