Getting approved for auto loans with bad credit, after filing bankruptcy is possible provided you have a down payment and can demonstrate that you are creditworthy despite your tarnished credit report. To prove this to a lender you need to do some careful preparation and document gathering ahead of time. For example:
-What caused you to file bankruptcy? Many lenders will listen to circumstances that surround this. Hopefully this was an isolated event in your history. Did you start a business that failed? Did you get divorced? Was there a significant medical event that caused you to be out of work for an extended period? Was your job eliminated? Whatever the case may be you need to be able to document this and show that you are in a better financial position now.
-Can you show that you have recovered financially? Be prepared to document that the circumstances that caused you to file bankruptcy are behind you and have been eliminated. In other words if your job was eliminated are you back to work full time now. If you got divorced produce copies of your divorce decree showing that the assets and debts have been divided up between both parties. If your business failed show that you are back to work for another company. Showing that you have stable job time by producing paystubs, and stable residence time by producing a utility bill or lease are also great ideas. This demonstrates stability and banks love stability.
-Have you obtained or paid off other loans since the bankruptcy? This is a big one because your payment history after a bankruptcy is very indicative of your future patterns. It shows the bank that yes some type of circumstance caused you to have to file bankruptcy but that circumstance no longer exists and you have proven that you have the ability and desire to repay a loan. No matter how small the loan was produce documentation to prove this to the lender.
Remember, the big picture here is to show the bank that you are in a much better financial situation now then you were when you had to file bankruptcy. The better you can convey this to the bank the better your chances for approval and favorable terms.
Take the time to gather all the items I’ve outlined here before you go to apply for a loan. Make copies and have them neatly packaged to show the loan officer. This will greatly increase your chances and make the whole process go a lot smoother.
