Nobody expects to have to declare bankrupt at some point in their life. However, it happens. This may feel like your financial life is over for good, it isn’t actually the end of the world. What you have to learn is how you can live with the new financial rules that will be imposed on you for a period of time. This also means that if you are considering refinancing your auto loan, you need to do it properly.
Issues with Bankruptcy
When people declare bankrupt, they usually can no longer get credit cards or other loans. This is a difficult situation, because you will find that you need money now more than ever before. The cushion that available credit has long provided has suddenly been taken away from you, and this makes things very difficult.
Refinancing a car loan may be particularly difficult after bankruptcy. That said, if you do manage to find one, you could significantly reduce your monthly outgoings after bankruptcy, leaving you with a little bit more breathing space. It is possible to find auto refinancing solutions after bankruptcy; you just need to know where to look and how to apply for it. The following five tips may be of benefit to you as well.
Tip 1 – Get Your Financial Housekeeping in Order
First of all, you need to gather the following pieces of information:
- Your credit score as it stands.
- Your credit history in terms of making repayments on car finance.
- The balance on your existing car loan.
Tip 2 – Know the Resale Value of Your Vehicle
Look online and in auto magazines to determine the current value of your car. Compare this to the amount you currently owe on your finance. If the value exceeds what your principal loan balance is, you will have a better chance of refinancing it.
Tip 3 – Check Your Current Interest Rate
You need to know exactly what your current interest rate. Simply pick up the phone to your lender, or look at your original agreement, to determine this. Any new finance you find should have an interest rate lower than your current one if you want to be financially better off.
Tip 4 – Make a List of Four to Five Lenders that Accept People with Bad Credit
Search online or speak to people you know about car refinancing lenders that accept people with bad credit. The more you find, the greater your chances of being approved at a lower rate.
Tip 5 – Complete a Preliminary Application with Every Lender on Your List
You must speak to the lenders and explain your personal situation with the bankruptcy and ask them for a quote. Make sure this isn’t a full application, however, as that will show up on your credit file. Be completely open and honest about your current situation. Finally, once you have a list of those that will consider you, apply for real and watch your financial situation improve, even if it is only by a little bit.