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Can you get a car loan after filing bankruptcy?
Can you get a car loan after bankruptcy? My uncle had to file for bankruptcy a while ago. He sold everything to pay off his debt. He was talking about how difficult it is to get a car loan now. It led to a debate on whether or not it was even possible for him to get a car loan.
Lauren Smith · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
I am sorry to hear how difficult it’s been for your uncle to get a car loan. It is possible to get a car loan after a
bankruptcy
is finalized. The length of time before he can apply for a loan depends on the type of bankruptcy he filed. Chapter 7 bankruptcy requires the person to wait until the bankruptcy is discharged. Chapter 7 is a short-term bankruptcy where you sell your assets to pay off debts. Obtaining a new asset or loan immediately after or during filing sets off red flags for fraud. This type of bankruptcy will stay on your credit report for ten years.
Chapter 13 bankruptcy allows someone to ask for the court’s permission to get a
car loan
during bankruptcy. Chapter 13 is a longer-term bankruptcy that requires a repayment plan instead of selling assets to pay off debts. This type will stay on your credit report for seven years.Because of how long bankruptcy stays on a person’s credit history, your uncle can do several things to avoid unfavorable terms and make it easier to get a loan:
Another option is refinancing. Car loan terms, especially after bankruptcy, tend to be around six to seven years. During that time, your uncle can focus on building up his credit again. Once he does, he can typically find better loan terms or a lower monthly payment by refinancing.
Jerry
is a great resource for comparing loan options from multiple lenders. Use our refinance calculator and avoid the hassle of searching for lenders yourself. Jerry makes it easy by finding the best lenders at the best rates.View full answer
- Gregory R.
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