Can I get a car loan after filing for bankruptcy?

I’m in the middle of bankruptcy proceedings. To make matters worse, my car just died on me, and I need reliable transportation for work. Can I still gain approval for a car loan after filing for bankruptcy?

Answer
Financial hardship is something that most people struggle with at some point in life—so try not to worry. Plenty of people have been where you are, and there are systems in place to help! You can get a car loan following bankruptcy—but the terms won’t be great.
Since bankrupt borrowers pose a high risk, many lenders won’t work with them. While some lenders specialize in bankrupt borrowers, the interest rates will be high, and the terms will be inflexible. Additionally, you’ll need to wait for the bankruptcy proceedings to end before you can apply for a car loan.
Once you’re ready, follow these steps to get approved for a car loan:
  • Get your credit report and assess the damage—it may not be as bad as you expect.
  • Start rebuilding your credit with little steps, like consistently paying your credit card debt.
  • Save money for a sizable down payment, as this can improve your chances of approval.
  • Shop around at banks, credit unions, and other types of high-risk lenders such as buy here pay here establishments.
Once you rebuild your credit a bit and find a lender with good terms, you’ll be able to get a car loan! That being said, you may be better off waiting for your credit to significantly improve. High-risk lenders tend to offer unreasonable terms and may insist on unrealistic interest rates.
If you still decide to take out a loan, start saving for your monthly payments with Jerry. A licensed broker, the Jerry app helps users save an average of $879 a year on car insurance—and it only takes a minute to sign up!
Eric Schad
Answered on Nov 19, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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