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Can I get a car loan after bankruptcy?

Aug 4, 2020 | Insights

While bankruptcy is generally a last resort option, countless unavoidable life circumstances lead many of us down this road. If you’ve been through bankruptcy, you may be asking the question “can I get a car loan if I have been bankrupt?” We’re here to tell you that you can! It’s possible to repair your credit and get a loan after bankruptcy. Everyone deserves a second chance and at Finance One, we help make second chances happen.

What is bankruptcy?

While it’s possible to take steps to minimise the financial risks that come with being human, sometimes we are hit by unforeseen events that are out of our control. Medical expenses that come from illness or injury, the destruction of uninsured (or under-insured) property or possessions, job loss or prolonged unemployment are just a few of the unexpected events that can render you unable to repay your debts.
If you find yourself unable to meet your debt obligations, bankruptcy is a legal process to release you from repaying most outstanding debts. An individual can voluntarily enter into bankruptcy, or be forced into it by someone they owe money to through a court process referred to as a creditor’s petition. You are given a fresh start by being legally released from most types of debt, but it comes with a long list of consequences and added stress. It’s certainly not the easy way out, especially if you need to access finance in the future.
That’s not the end of it though. It’s not as simple as wiping your debt and leaving you free and clear. Sometimes assets may need to be sold or regular payments made to creditors to help repay debt. Overseas travel, access to finance and employment options may also be impacted.

Getting back on track

Your credit report will typically show the bankruptcy for five years, which means you’ll likely have a hard time accessing finance during this period. Fortunately, there are steps you can take to improve your financial position and increase your chances of being approved for a loan.

  • Create a budget and stick to it. Effectively managing a budget is a great way to monitor your spending habits, build up savings and demonstrate that you are responsible with money.
  • Gain stable employment. A regular, stable income is a great way to build financial security and improve your credit rating.
  • Reduce loan applications. Where possible, try to avoid applying for finance – even once you’ve been discharged from bankruptcy – as credit applications and rejections can negatively impact your credit score.
  • Find a suitable lender. As mentioned above, applying for multiple finance products can impact your credit score, therefore, it’s important to seek out a lender who is willing to work with applicants who have experienced bankruptcy and may have a bad credit history.
  • Pay any bills on time. Any debts or bills in your name – whether gas or a phone bill for example – influence your credit score. Ensuring you pay any bills on time will have a positive effect on your credit score.
  • End bankruptcy early. If you repay your debt in full or your creditors agree to accept a lesser amount, you can end your bankruptcy early. This is called an annulment.
We’re here for you

If you require a car loan after you have been discharged from bankruptcy, we may be able to help. At Finance One, we understand that life can be rocky at times and we’re passionate about helping people get back on track with second chance finance. We offer car loans from $5,000 up to $75,000* and work with applicants who have been discharged from bankruptcy. There’s no reason why life after bankruptcy can’t be even better than it was before.

 

* Loans from $50,000 to $75,000 need to be asset backed, and normal lending criteria, fees and charges apply.

Disclaimer: The information above is of a general nature only and does not consider your personal objectives, financial situation or particular needs. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your particular circumstances. We do not accept responsibility for any loss arising from the use of, or reliance on, the information.

Article by: Estelle Fletcher

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