What can I do to secure a car loan after bankruptcy?

Getting post bankruptcy car loans can be a tricky endeavor. Bankruptcy, either chapter 7 or chapter 13, has a very damaging affect on your credit. While chapter 13 is not as detrimental to your credit score as chapter 7, both forms of bankruptcy do show up on your credit report for between seven and ten years. Creditors, including car loan lenders, are going to be wary of lending you a lot of money to borrow a car when you have already proven yourself (in their eyes at least) to be a credit risk.

However, there are a few things you can do to try to secure a car loan after bankruptcy. For example, you can:

• Wait and build your credit. While getting a car loan after bankruptcy is going to be hard, getting a secured credit card generally isn't. Secured cards require you to put up collateral so there is no risk to the lender. They are often used by those who have declared bankruptcy to establish a positive payment history. Once you have some on time payments under your belt and your credit score begins to rise, you can then apply for a car loan
• Get a co-signer. If you have a friend or a family member with decent or good credit, he or she may be able to co-sign for you. The creditor will be less worried then, since the loan will also be based on your co-signer's credit standing.

There may also be other options available to you as well, but you need to be careful that you do not take a very high interest, very expensive loan with bad terms. There are lenders that prey on subprime borrows and if you fall into their trap, you can get yourself into debt trouble all over again. To be on the safe side, you should seriously consider having an attorney look over any car loan papers prior to signing so you don't create more financial issues that will need to be dealt with later.