Whether or not an auto loan approval is easy depends on your preparedness and your credit situation. But, after you’ve completed a bankruptcy and you’ve got your discharge papers in hand, you can usually get a car loan rather quickly – if you're working with the right lender.
After a Bankruptcy and Car Loans
Once your bankruptcy has been discharged, it’s almost like a weight is lifted off your shoulders. If you need another vehicle right away, and you’ve got your discharge papers, it can be as easy as finding a bad credit auto lender to work with.
Since your bankruptcy is completed, you’re in a much better place financially. Additionally, a discharged bankruptcy tells lenders that you made the steps to organize your finances, and have come out the other side of a bankruptcy with a fresh start.
However, your credit score has likely seen better days, since a bankruptcy does some heavy damage. Depending on the type you filed, your credit reports could reflect a bankruptcy for two to 10 years.
That’s why you need to find the right lender for the job: subprime lenders. These lenders, also known as bad credit lenders, work with borrowers in many types of credit situations, including bad credit, no credit, and post-bankruptcy.
Requirements of Subprime Lenders
While your bankruptcy is finished, you’re still going to need to meet the requirements of a subprime lender to be considered for a car loan. Whether or not it's easy is going to depend on your income, your overall job and residence stability, and if you have a down payment prepared.
To help you get ready for what a subprime lender is likely to ask for, we’ve got a list of commonly requested items:
- Discharge papers – If you’ve recently been discharged from a bankruptcy and the discharge isn’t on your credit reports yet, you need your discharge papers to be considered for an auto loan.
- Recent computer-generated check stubs – Proves your income. Typically, you need a minimum monthly income of around $1,500 to $2,000 before taxes. Check stubs also need to show year-to-date income.
- Recent utility bill or bank statements in your name – Verifies your address. The longer you’ve lived in the same area, the easier it can be to get car loan approval from a subprime lender.
- Driver’s license – Proves your identity. Must be valid, meaning it's not revoked, expired, or suspended. Must also have your current address listed.
- Down payment – Subprime lenders usually require a down payment of at least $1,000 or 10% of the vehicle’s selling price, occasionally whichever is less. This may depend on your income and the type of car you’re looking to finance.
- Recent phone bill – Lenders need to be able to contact you, so be prepared to prove you have a working phone. Prepaid phones won’t be accepted, it must be a contract cell phone or landline.
- Personal references – Once a lender has verified all of your other information, and you’re on your way to approval, expect your lender to request a list of around five to eight personal references with contact info: name, phone number, address, email. References can be pretty much anyone, as long as they don’t live with you.
While these items vary from lender to lender, these are the basics you can prepare for to make the auto financing process easier on yourself. Since subprime lenders rely as much on your ability, stability, and willingness to pay as your credit score, they require these documents to get a better picture of your individual situation.
Finding a Subprime Lender
Subprime lenders work through a dealership’s special finance department, and they can be a little tricky to find. They’re more commonplace now, but we want to help reduce the hassle of tracking down a lender that can work with post-bankruptcy borrowers.
To make the car loan process easier on you, start with us at The Car Connection and fill out our free auto loan request form – it's quick, secure, and there’s no obligation to buy anything. We’ll look for a special finance dealer near you right away!