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Get a Bad Credit Loan After Bankruptcy

Bankruptcy doesn't mean that it's impossible to get an auto loan--in fact, it’s only one of the elements that a lender looks at. It's important to remember that you have options. Even after bankruptcy, you can find a car and financing with a bad credit auto loan. There are three simple steps to begin working towards a bad credit auto loan.

1. Check your credit score and do what you can to improve it. Looking at your credit score previous to applying for a bad credit auto loan will likely feel a little painful, but it's necessary to see what a bad credit auto loan lender will be seeing. Pay attention to your auto loan history, since a lender will often weigh that heavily in their decision.

2. Save enough money for a down payment in preparation for your loan. Bad credit auto loans usually require down payments, and the larger the down payment is, the less risk the bad credit auto financing lender is taking. You may be able to trade in a vehicle to put money towards your bad credit auto loan.

3. Get pre-approved before you visit a dealership. Being pre-approved for bad credit auto financing gives you leverage and allows you to understand what cars you can afford. If your bankruptcy is recent and your credit hasn't been rebuilt, your bad credit auto loan rate may be higher.

Don't be afraid to approach lenders about a bad credit auto loan, and don't assume that only "buy here pay here" dealerships will work with you. Feel free to shop around and find a loan with terms that work well for you. Then pay your loans on time, monitor your credit score, and consider refinancing your bad credit auto loan at a lower rate once your credit score has improved.

Questions to Ask Dealers About Your Bad Credit Auto Loan

A bad credit score won’t necessarily cut you out of the auto loan process. You can still qualify for a loan and buy a car with poor credit; but the payments, interest rate and terms will vary. Before you walk into the dealer, arm yourself with a list of questions to ask about your bad credit auto loan.

What is the minimum down payment?

Just because a buyer needs bad credit auto financing doesn’t always mean they’ll need a high down payment. Minimum down payments will vary depending on your dealer and what type of bad credit auto loan you need.

How high is the interest rate?

Before signing your loan, ask dealers about the type of interest rate attached to your bad credit auto loan. Remember that your interest rate on a bad credit auto loan affects your monthly payment, as well as the overall amount you'll ultimately pay.

What are the terms?

Auto loans can vary in length for buyers with bad credit auto financing. The specific terms will depend on your dealer and any negotiations that take place over your bad credit auto loan financing.

What kind of car will I qualify for?

It’s not uncommon to hear stories about people with bad credit auto financing being shown a different selection of cars than other buyers. Ask in advance if you will have any vehicle restrictions and what type of car you can expect to qualify for.

Can I Get an Auto Loan with a Repo?

Getting a car repossessed isn't an easy thing to go through, but you may still qualify for bad credit auto financing.

Prepare to apply for a bad credit auto loan. Check your credit score and review the damage. You need to know what a bad credit auto loan lender will see when they consider your loan application. Pay your bills on time and settle any balances, especially if you still owe money on your previous auto loan. Then bring together what money you can for a down payment on your bad credit auto loan.

Shop around for the best deal. Look to different lenders for their rates on a bad credit auto loan. Keep your options open and don't restrict yourself. A high down payment or a cosigner may make it easier for a bad credit auto financing company to approve you, since it means they'll be taking less risk on you.

Be realistic about the car you want. Try to get pre-approved for a bad credit auto loan so you can set a budget for yourself before you go to the dealership. Alternatively, you can work with an in-house bad credit auto loan lender.

How to Get an Auto Loan with Bad Credit

A bad credit score and poor history can make auto financing miserable for some, but it isn't impossible for everyone. Unfortunately for many Americans, buying a car with cash is just not an option, leaving some consumers behind a road block caused by bad credit.

If you're in the market for a used car but don't have the credit for a normal loan, here are several ways to secure a bad credit auto loan and buy the car you've always wanted.

Sub-prime lenders

Sub-prime lenders specialize in bad credit auto loans and may be able to approve you when other traditional lenders won’t. These lenders often finance in-house as well, so you don't have to go outside the dealership for a loan.

Credit unions

Credit unions are another alternative to traditional banks and may work with its members to set up bad credit auto financing. And if you're not already a member, signing up for a number of bundled services could help secure a bad credit auto loan as well.


If you have a family member or significant other with good credit, and they're willing, they can sign on a bad credit auto loan to help secure a better interest rate. But remember, if you don't make your monthly payment it may hurt their credit as well as yours.


Some dealerships will offer bad credit auto loan rates for consumers who struggle to find financing elsewhere. This may be a way to handle a bad credit auto loan and purchasing (along with service and warranty) under one roof.

When you consider the options, there are many opportunities to secure a bad credit auto loan.

All information provided on this site is for informational purposes only and may have come from other sources. DriveTime makes no representations as to its’ accuracy or validity, and it is provided on an as-is basis.
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