Car Loan After Bankruptcy

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The process for buying a car after bankruptcy

Filing for bankruptcy and wiping out your credit score, as well as your debts, can be stressful. On top of that, attempting to make a major purchase like buying a car can seem daunting.

But here’s some positive news. Getting a car loan after bankruptcy is possible in many cases. You’re not the only one to go through the bankruptcy process, and there are lenders ready to consider the financing needs of consumers in this situation.

How long after bankruptcy can I buy a car? 

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Most people filing for bankruptcy file for a type called Chapter 7, in which the debtor’s non-exempt assets are sold and the proceeds given to the creditors. Filing for Chapter 7 bankruptcy takes about 120 days, or four months, until the case is closed and the debts are erased. The bankruptcy can then stay on the debtor’s credit report for up to 10 years.

The other main type of personal bankruptcy is Chapter 13, designed to enable people with steady incomes to hold on to property that might otherwise be lost through the bankruptcy process. A plan is created for the debtor to pay all or part of their debts to creditors over three to five years. A Chapter 13 bankruptcy may stay on the debtor’s report for up to seven years.

You don’t necessarily have to wait years to buy a car, but consider spending some time to rebuild your credit before applying for a car loan after bankruptcy., a debt-help organization, recommends applying for a secured credit card, and paying it off each month for 12 months, before moving onto an unsecured credit card and seeking a car loan. A positive credit history will help your credit score, which is a key factor in determining whether you will qualify for an auto loan, and what interest rate you might get, says the Consumer Financial Protection Bureau (CBPB). The longer the history, the more information there is to potentially improve how you are seen as a credit risk, says the bureau.

Getting a car loan after bankruptcy

  • Do your homework. The CFPB urges consumers to check their credit reports before applying for financing. Look out for errors that may count against your auto loan application. You can request a free copy of your credit report from each of the three major reporting agencies once a year, and find details of how to do that at the CFPB website.
  • It may help to budget and work out how much car you can realistically afford. Estimate your total loan amount with an affordability calculator, and familiarize yourself with how different interest rates and loan terms affect potential payments with the monthly payment calculator.
  • Compare lenders. Even post-bankruptcy, there may be numerous options to consider when looking for financing, enabling you to compare loan rates and terms. While it might be possible to get approved for a car loan after bankruptcy, you need to be prepared for a higher interest rate or potential down payment requirement than you may have received had your credit been perfect. This might be the case even if you have a high income.
  • A couple at a car lot looking at a blue car.Getting preapproved for your financing may also help your position when buying a car after bankruptcy. If your application is approved, you’ll have the benefit of knowing the terms of your auto loan, like interest rate, loan amount, monthly payment and loan duration, before shopping for a vehicle. Besides streamlining the financing process, it enables you to focus on trading in and choosing a vehicle at the dealership, says the CFPB. RoadLoans is a direct-to-consumer auto lender that enables qualified applicants to get preapproved online. Applying for a car loan after bankruptcy takes just minutes, and you’ll receive a decision in seconds.
  • If a lender approves your application, you can begin shopping for a car. As your credit history has taken a hit, bear in mind that the loan amount may only be large enough to buy a used vehicle.
  • If you’ve been approved for a loan by RoadLoans, there’s more good news. RoadLoans works with a nationwide network of dealers offering used and new vehicles meeting our requirements for age, mileage and financing. We’ll recommend local dealerships within your loan packet, and our dealer locator tool will also help you pinpoint dealerships nearby. Take your loan documents along to the dealer and, once you’ve closed the deal on your car, the dealership staff will work with us to complete the transaction.

Auto loans after bankruptcy may build your credit

Besides the benefits that come with having your own car, making timely payments on a car loan after bankruptcy will help you build your credit, as long as the lender reports the activity to the main credit reporting agencies, states the CFPB. And if your credit history improves over time, there may be options to refinance your loan.

Apply for a Car Loan After Bankruptcy

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Our Process

RoadLoans streamlines the auto financing process to make car buying simple.

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Buying a Car With Bad Credit*

Auto financing for consumers with poor credit.

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No Credit History?

You can still apply for an auto loan with no credit experience.

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* “Bad” or “Poor” credit generally is considered a FICO score around 600 and below by sources including the Consumer Federation of America and National Credit Reporting Association (reported by the Associated Press),,, Investopedia, and others. The Congressional Budget Office identifies a FICO score of 620 as the “cutoff” for prime loans. FICO scores are not the sole factor in lending decisions by and Santander Consumer USA.