Once you have fallen down the rabbit hole so to speak and have had to go through bankruptcy proceedings, there are ways to rebuild your credit and be able to finance a new or used car purchase.Here are some avenues that you can take to accomplish this goal even though some of them will not happen overnight and take time to implement. Remember, the financial mess did not happen overnight. Plan for your monthly expenses. Even though you may have discharged most of, if not all of your long term debt, you need to create a budget so you can know what you can afford to spend. Create an emergency savings account to ensure that you are never late on any of your bills. This will keep you on the straight and narrow.
A secured credit card can ease you back into the good graces of the lending community. After making on time payments for a while, some lenders may consider you an acceptable risk. Just make sure that your payments are always on time so you can rebuild your credit history and raise your credit score. You must also pay all of your other monthly obligations on time as well. Doing this consistently is what will raise your credit score Finding someone who is willing to be co-signer for you can be difficult, but is not impossible. The person that you select must have a high credit score to qualify for the loan. Although you must make the payments, if you fail to do so, the lender will come after the co-signer to make good on the loan. They do have the risk of having their credit damaged if you default and they cannot make the payments themselves.
Consider paying a high interest rate. It will cost you much more than if you have a market priced loan, but you will be rebuilding your credit at the same time. This method averages you about 3or 4 percent more on the interest rate due to your poor credit history, but will allow you to not depend upon anyone else. The saying is “cash talks”. How about coming in with a big down payment? Just save your nickels and dimes until you have enough green backs to make it worth their while to want to do business with you. Have at least 10 or 20 percent of the cost to finance a new car purchase. It’s not a guaranteed deal, but you may be able to make your case and drive out of the showroom.
Time can be your best ally. Put your purchase on hold for 2 years. After you have made timely payments for 24 months, lenders look at you in a different light. They typically go back this far in your credit history when considering you for a loan. You will need to have at least 2 secured credit card accounts on your credit report to enable you to qualify for a low cost interest rate auto loan. The longer an account is open, the more points that accrue to improve your score.