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Is it hard to get a car loan after bankruptcy?
How hard is it to get a car loan after bankruptcy? My cousin asked me if I'd be willing to cosign his new car loan. He had to file for bankruptcy a while back and said that it's difficult to get a car loan because of it.
Lauren Smith · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Bankruptcy
stays on someone’s credit history for seven to ten years, depending on the type they filed. While you can get a car loan after a bankruptcy, it can be difficult to find a lender,When getting a car loan, lenders look at your credit score and your credit history. Both a low credit score and bankruptcy will deem someone too risky of a borrower. Typically, loans for lower credit scores often have high interest rates or less than favorable terms and conditions.
If the lender doesn’t specialize in loans for lower credit scores or those with bankruptcies, they’ll likely require a cosigner to reduce their risk. Since a cosigner usually has a much higher credit score and payment history, the loan is less likely to default with a cosigner.
Beyond having a cosigner, a lender may also require that your cousin makes a higher downpayment or may require longer loan terms.
If you’re concerned about cosigning for a loan, your cousin could always refinance after making several payments. If he chooses to refinance, he can remove you as a cosigner and likely reduce his monthly payments.
For an easy way to refinance, try the
Jerry
app. 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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