Thanks to the increased competitiveness in the loan Industry today that getting an auto loan or asking for a refinancing with a bad credit status or even after bankruptcy have became easier than before.
Here are some key steps to go about getting an auto loan refinanced after filing your bankruptcy;
1. You might want to wait till for at least 6 months after filing your bankruptcy or after your bankruptcy is dismissed, clearing off all the necessary out-standing debts before applying for a refinancing. Seek relevant advice from the professional such as the bankruptcy specialist or credit officer in this case.
2. In cases where you could not wait any longer but need to get the refinance done sooner instead of waiting to get your debts cleared off first and your bankruptcy to be cleared, you have no other choice but to proceed with what you can for the mean time and seek the best from what you can obtain with your bankruptcy status.
3. Get to know the ‘retail value’ of your car in the trade in market now, and also find out what is the outstanding amount which you still owe for the car. If the difference of these two values after getting the “retail value” to minus off the “out-standing debt” is more than zero, then good new! You have a positive equity for this deal and at least you are not in an upside-down position.
4. Next, spend some time searching for a good Auto lender who is willing and specialize in offering loans to people with bankruptcy records. Do not simply accept any offer which has granted to you as some of the lenders out there might over inflate the refinancing rate just to take advantage of your credit positioning. They may do so as they doubt that you will be able to get any other offer elsewhere because you pose a higher risk to any lenders. However please do not fall for this even if you are in a bad credit position, for do not default on a new loan which is offered to you without good consideration.
5. On average, any lenders will only offer refinancing for up to a maximum of 110% only. If you need to have a refinancing loan at 120% because of the negative equity you are currently in, then you need to top up the difference, which in this case, is the additional 10% to get the whole deal locked down.
6. However there is one key thing which you need to bear in mind is that you are required to pay a higher late payment fee or is offered a higher loan interest rate because of your bad credit score (which was affected by your bankruptcy) by most of the loan lenders out there.
7. Some of the lenders may ask you for some collateral on your refinancing loan such as a house or a car because of the high insecurities they are putting themselves in here. The purpose is to make sure the lender is secured with the loan even if you default for the outstanding loan payment one day.