Declaring bankruptcy can be very difficult, and for many, the weight of their bad credit may feel impossible to escape. However, it is possible to get back to financial health and make decisions like taking out a loan. If you need to purchase a vehicle but recently filed for bankruptcy, you may wonder: “Can I secure a car loan in my current financial situation?”
Below, we’ll discuss how bankruptcy affects your credit and ability to apply for financing. We’ll also discuss how our team at Auto Loan Hub can help you secure bad credit vehicle financing, so keep reading to learn more!
How Bankruptcy Impacts Your Credit
If you have fallen into overwhelming debt, you’re not alone- many Canadians have found themselves in the same situation, and filing for bankruptcy has helped them address their debt and take steps to wipe the slate clean.
While bankruptcy can be a useful method for consolidating debt, it does come with its consequences. In Canada, filing for bankruptcy can significantly lower your credit score, impacting your ability to secure loans from banks and other lenders for up to seven years.
However, this doesn’t mean you can’t be approved for a loan or financing. Instead, lenders will examine factors such as your income, employment stability, and money management skills to determine whether they see you as a financial risk.
While having a history of bankruptcy might impact certain options (especially if the file was recent), this doesn’t removethem.
Can You Get a Car Loan After Bankruptcy?
Yes, getting a car loan after bankruptcy is possible! However, the terms of your car loan may differ from those of someone with a better credit history, as certain lenders may require a higher interest rate on your payments.
While it’s unlikely that you’ll be approved for a brand-new car model, you can still get a good-quality vehicle that suits your needs and fits realistically into your budget.
Steps to Improve Your Chances of Approval After Bankruptcy
While you can be approved for a car loan after bankruptcy, taking steps to improve your financial situation will improve your chances of securing funds for your new vehicle. If you don’t need a vehicle immediately, take the time to rebuild by doing the following:
- Raise your credit score: Restoring your credit score is one of the best things you can do to show lenders you’re a reliable borrower. You can get a secured credit card to make small, regular payments; before you know it, you’ll see your credit score increase.
- Save for a down payment: A higher down payment will vastly improve the terms of your loan, and lenders will see you as less of a risk.
- Remove all debt: If you have any residual debt that wasn’t included in your bankruptcy file, reduce it as much as possible. A lower debt-to-income ratio will paint you as a more responsible borrower.
How Auto Loan Hub Helps Drivers with Bad Credit
The best way to get a car loan after bankruptcy is to find the right lender. At Autoloan Hub, our goal is to help people from all financial backgrounds secure a vehicle!
Our hassle-free loan approval process allows you to be preapproved for a loan within minutes. Using our prequalification tool, powered by Equifax, we’ll examine your credit history and profile to determine what you qualify for (don’t worry—this is a soft check and won’t impact your credit score!).
From there, we’ll contact our vast network of lenders and locate one that can assist you in securing financing, regardless of your bad credit. You’ll gain access to a wide range of car dealerships from Canada’s top brands, where we’ll help you locate a vehicle that fits your needs and budget.
Our team will handle all the logistics and legwork- you can secure financing and your vehicle from the comfort of your home! From filling out the paperwork to delivering your car directly to your door, Autoloan Hub will help you every step of the way.
Get Started Today
Bankruptcy doesn’t have to be a barrier when it comes to finding a vehicle. With Auto Loan Hub, you can secure bad credit vehicle financing and get the perfect car for your needs!
Visit our How it Works page to get started.
