We receive many questions regarding the feasibility of obtaining finance for the purchase of a car or motorcycle when the applicant has a past bankruptcy registered on the credit report. Though it is possible to obtain financing in the form of a car loan or motorcycle loan with a past bankruptcy, it is not an easy task and the requirements for approval may be harsher than the ones needed to get approved with fair credit.
There are three issues that need to be analyzed: the state of the bankruptcy, the waiting time span needed to be considered for eligibility and the methods to boost your chances for approval: Co-signing the loan application and putting money down. These issues need to be analyzed step by step because if the first one is not resolved, it makes no sense to proceed to the next one since the loan approval would be blocked.
Bankruptcy Needs To Be Discharged
This is a particularly important issue as many people try to apply for a loan while going through a bankruptcy process. If you are currently on bankruptcy, you won’t be able to obtain finance unless the court allows it and supervises it. Therefore, it is very hard to obtain finance with bankruptcy and even if the court allows it, the lenders might be hesitant due to your resent financial failure.
Thus, your bankruptcy needs to be discharged before even considering applying for a car or motorcycle loan. The rule is simple: no discharge equals no loan approval on your own whatsoever. And even if your bankruptcy was discharged, it needs not be a recent discharge as that will also keep lenders away. There is a time span that depends on the loan, the lender and the credit score and history of the applicant.
Time Span Requirement
An interesting question is how long you need to wait before applying for finance once your bankruptcy has been discharged. And, if we say that the question is interesting is not precisely because it has a simple answer. Actually, the answer is rather complicated as it depends on all too many factors. For instance, it is not the same if you want to apply for a secured loan than for an unsecured loan. Nor is the same if you are applying with a co-signer or not.
However, we can say this: you need to wait at least six months before applying for any kind of financial product of a significant amount or credit limit (lines of credit). Only small amount loans can be approved before that time spam. Higher amount loans need at least six months since the bankruptcy has been discharged in order to qualify. Some types of loans may take even longer, but chances are that none will be approved before that period.
Car or Motorcycle Loans, Co-Signer, Down Payments
As regards to car or motorcycle loans, the above is also true. Though these loans are usually secured, you will still need to wait for at least six months before applying and getting approved for an auto or motorcycle loan once your bankruptcy has been discharged. Your only chance of approval prior to that period of time ends is to get the aid of a co-signer and / or provide a good down payment (more than 30% of the purchase price).
