We do not usually feel the need to brag, but we got someone a loan on a 2011 Mustang GT with Navigation right out of bankruptcy. Not only that, but we got that person approved for 4.9% on his auto loan.

Does everyone qualify for that type of loan? Heck no. But when someone can qualify, it is good to know that we can deliver.

How can you get a really good interest rate right after bankruptcy?

1. Loan structure (most important factor)

The auto loan needs to be attractive to the lender before they look at your credit profile. In the situation above, the customer had about a 25% down payment and the loan was fairly short term. You may need more or less down payment to qualify for that kind of rate, but at least we can get you there.

2. Affordability

If you cannot afford the payment, in the bank’s eyes, why should they give you a loan?

3. Previous comparable good credit

Not everyone with a bankruptcy has the same credit. What kind of borrower you were in the years leading up to your bankruptcy will play a huge roll in your loan options after the bankruptcy. For example, if you have never made a payment on a car loan over $300 per month, the auto lender might not help you get a $500 car payment.

4. Willing to buy brand new

Rates are usually a little better on brand new, even though monthly payments are usually higher. The lenders that offer “no down payment” loans right after bankruptcy do not usually like brand new vehicles because they take the biggest drop in street value when you drive them off the lot.

5. Willing to pay more per month

This kind of goes with Number 4, but it is important to understand. Even though you may be able to buy brand new, it might not be worth it to most people. It is not uncommon to have a $500 payment on a brand new car right after bankruptcy, even with a good interest rate. A similar car that is used might qualify for a $350 payment even though it is a higher rate.

How is this possible?

Remember, new cars are more expensive than pre-owned.  And to qualify for a better rate, you are probably going to have to go with a short term loan. Those two things all by themselves make it so that the payments are usually higher on brand new vehicles right after a bankruptcy.

Another major factor that prevents most people with a recent bankruptcy from getting into one of the low interest rate programs is that since they recently filed bankruptcy, it might be hard for them to have a significant down payment saved up. Most people file for Chapter 7 Bankruptcy because they do not have enough money. The lender often asks the following question in these situations: If the customer has $XX,XXX down, why did they file for bankruptcy? It is a good question, and we will need to give them an accurate answer.

WA Auto Credit specializes in helping people with a recent bankruptcy obtain auto loans so that they can buy a vehicle through one of our dealers. If you are interested in getting an auto loan through one of our programs, please apply on our website, or call us at 888-300-3502. We would be more than happy to explain your options to you.

All loans are subject to lender approval.