Bankruptcy

Its Becoming Harder To Get Car Loan After Chapter 7 Bankruptcy

By Jonathan Alper

Its more difficult for anyone to get credit today, and its particularly becoming more difficult to get credit after filing bankruptcy. I had a conversation yesterday with a man who manages a large car dealership. He has been in the car business for over 20 years. He said that before the banking crisis banks would give car loans to people within two years after they had filed Chapter 7 bankruptcy if they had average or better credit scores. Now, lenders are not considering car loans until at least three years after bankruptcy. Good credit scores are insufficient. Car lenders are also examining debt/income ratios, and they are denying car loans to people if it looks like they have again, after bankruptcy, taken on more debt than they should or could afford.

The car manager explained that lenders were burned by lending to people wth high creditor scores in the past few years. Borrowers buried in debt were able to maintain high credit scores by timely making minimum payments. These high-score borrowers were disasters waiting to happen. After the credit disaster did happen for too many car borrowers the lenders have learned their lesson (for the time being). If you have filed a bankruptcy and want a car loan with average interest rates you may have to wait three years, have a decent credit score, and show the car lender that you can comfortably afford the car loan.

posted by Jonathan Alper, banrkuptcy and asset protection attorney, Orlando, Florida

Full post as published by Florida Bankruptcy Law on March 27, 2009 (boomark / email).