Filing for bankruptcy provides an opportunity to discharge some or all of your debts without the need to give up property such as a Maryland home. However, it may complicate your efforts to apply for vehicle financing as the bankruptcy remains on your credit report for up to 10 years.
How lenders view bankruptcy
There is no amount of time that you have to wait after filing for bankruptcy before attempting to apply for a vehicle loan. However, if you file for Chapter 13 protection, you will need to get permission from the bankruptcy court before the loan can go through. In addition, lenders may have their own requirements such as not giving loans to people who have filed for bankruptcy in the previous one or two years. Of course, there are dealers and lenders who primarily deal with people who have filed for bankruptcy and will work with you right away.
A cosigner might help
Adding a cosigner to your loan provides security for the lender because someone will be available to make payments if you cannot. Essentially, you get to benefit from this other person’s high credit score and creditworthiness to vouch for your ability to pay. In addition to obtaining loan approval, your reduced risk to the lender might also allow you to get a reduced interest rate or other perks. It may also be helpful to check your credit report after the bankruptcy is over to ensure that your score isn’t being held down by inaccurate information.
Obtaining a car loan during or after bankruptcy may require extra steps. However, it should still be possible to get the financing that you need at a price that you can tolerate for the next three to six years that you’ll be making loan payments.