Can I get a car loan after filing bankruptcy?

The answer is, “yes, but…”

The “but” is that it will be more difficult. Declaring bankruptcy will significantly negatively impact your credit rating, and it will stay on your credit for 7 years. Many lenders will be wary of lending to you, because of your credit status and the bankruptcy. However, there is no legal bar or restriction to getting a loan—i.e., there’s no rule saying you can’t get one. So the issue is simply finding a lender who will offer you a car loan.

You should be prepared to spend more time looking for a loan, but the Internet makes that easier than ever—you can apply for loans with many lenders easily. Also, some car dealerships provide their own financing, and nowadays, car dealerships aren’t turning away any customers; a dealer may be very willing to extend you a car loan or financing. So budget time to shop around, from both banks and car dealers, and you should be able to find a loan.

You can expect to pay more for a loan than you would have before declaring bankruptcy—that is, you’ll probably have to pay a higher interest rate than you would have otherwise. Because of that, and because your general credit worthiness is impacted, you should probably look for a less expensive car than you might have under other circumstances. A lower price will reduce the amount of financing you need, increasing the chance of approval, and will also minimize the impact of higher interest rates.

If you can get someone, such as family member, to cosign or guarantee the loan for you, that will help both the chance of getting the financing and probably reduce the interest rate (by reducing the risk to the lender).  Or if you or your family has a small business and the business is separate from you (e.g. it’s an LLC or corporation) and did not itself declare bankruptcy, consider having the business purchase the car, apply for the loan, or guarantee the loan on your behalf.

Talk to a Bankruptcy Lawyer before you take any steps. If done right, your credit will bounce back very quickly after bankruptcy.