How to Get a Car Loan After a Bankruptcy

When you file for bankruptcy, a lot of people will tell you that re-establishing credit will take years. They'll also warn you that you'll be unable to buy anything on credit for a long time, and that your credit history will be permanently damaged.

These warnings are FALSE.

The truth is, if your bankruptcy is discharged, re-establishing credit can be done in as little as twelve months. As long as you know how the US credit system works, you can restore your credit quickly and painlessly.

1. Put you house in order.

It's important to have a budget and a savings plan before you start re-establishing. You have to have savings to get re-established quickly, and you'll need discipline to follow a budget and save. When you come up with a plan make sure you follow it. Also, creditors will probably send you bills for debt that was included in your bankruptcy. Make sure you take the time to inform these creditors their debt was included and provide them proof. If these creditors accidentally file a collection against you it can really slow you down.

2. Start hoarding cash and saving paperwork.

You'll need to save as much cash as possible as quickly as possible. You need cash to get a secured credit card, for a vehicle down payment, and also for an emergency fund. You also need to hoard all of your financial documents. That means your bankruptcy paperwork, your bank statements, pay stubs, and all of your bills. Keep them organized and in a safe place because future creditors may ask for copies.

3. Get a secured credit card.

Secured credit cards are a great way to get your credit back on track. Just make sure you don’t use them more than once. That's right, get a secured credit card but use it only once. Pay it off the first month you get a bill. Once that first payment is made on time, the credit bureaus will report that you're making payments. Then destroy the card. Even if the card is no longer being used, the credit bureau will still show that you're making payments on time and you will be building credit.

4. Buy a car.

Believe it or not, buying a car after a recent bankruptcy can be done. But you need to know a couple of things first: this car isn’t going to be the car of your dreams. The car of your dreams is probably too expensive. If the first car you buy after bankruptcy is something cheap with good resale value (like a small car or small SUV) you can trade it in a year and get a car you'll like. Also, you've got to have a down payment saved up.

5. More credit cards.

Now that you’ve bought a car and you have a secured credit card, it’s time to get some unsecured credit cards and to start working with a local credit union. Apply for the Discover card, any Visa or MasterCard (as long as there isn't an annual fee), or any credit card offered by your credit union. Most importantly, if your application for a credit card is denied, call and ask WHY. Because most applications are denied by computer, you can often call and get a denial overturned.

6. Buy the car you want.

The end is here. You've done everything right, a year has passed since your bankruptcy discharged, and your credit is now re-established. You can get the car you want.

While re-establishing credit after a bankruptcy is fairly easy, it's also easy to slide back into a bad credit pattern. Make sure that you are always saving money -- if you have savings, you have options. Also, take a look at your life and your spending and compare it to your habits before you filed bankruptcy. Are you doing some of the same things as before? If so, make a change. While re-establishing after your first bankruptcy is simple, re-establishing after a second is very difficult.

Article Source: http://articlekarma.com

About the author: Jason Lancaster has nearly 10 years of experience in auto finance. He's helped hundreds get a car loan after bankruptcy and has experience working with creditors for bankruptcy car loans.
This article is available as a unique content article with free reprint rights.

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