• How to Get a Car Loan after Bankruptcy?

    The decision to purchase a car or make any sort of financial investment after facing bankruptcy can undoubtedly be a terrifying step to take. However, there are options (access to credit) available still. There are lenders who are willing to offer auto financing to borrowers who are recovering from financial setbacks. Even auto dealerships don't shy away from selling new and used cars to customers with a bad credit history.

    Having a car of your own serves as a convenient mode of transportation for short and long-distance travels in urban and rural areas across the country. Banks and Non-Banking Financial Companies (NBFCs) offer auto financing to purchase any make or model of car in the passenger and commercial vehicle segments that are available in the Indian market. The 3 most popular types of car loans offered in India are new car loans, used car loans, and loan against cars. It is important to do some research when you are in the market for a car loan in order to find a suitable car loan offer.

    Tips by which you can get a Car Loan after Bankruptcy:

    • Review your credit report: Lenders check the credit report of an applicant to assess his or her creditworthiness. The credit history and credit score of an individual represent the person's ability to manage credit. Before applying for a car loan or any loan for that matter, it is important to review your credit report and check your credit score. You can work on improving your credit score by making credit card bill payments and loan EMI payments on time.
    • Check your car loan eligibility: Make the smart decision to check your car loan eligibility online before applying for a car loan with a bank or an NBFC. Multiple loan rejections can negatively affect your credit score. Even applying for multiple loans at the same time can indicate a financial desperation on the part of the applicant. Therefore, ensure you meet the eligibility criteria set by the lender before applying for a car loan.
    • Make a high down payment: If you can manage to get together a significant sum of money to make a high down payment on the car of your choice, the chances of car loan approval are higher.
    • Opt for a loan against car: Banks and NBFCs offer loan against car for customers who are in urgent need of funds. You can pledge your old car as collateral to the lender in order to obtain funds to purchase a new car. You can get a maximum loan amount of up to 90-100% of the value of the car that you are putting up as collateral.
    • Opt for a used car: The price of a used car is lower than a new car. Furthermore, there are organised used car dealerships in India where you can get certified and well-maintained used cars. Choose a second-hand car that is less than 3 years old. Keep in mind, the insurance cost of a used car is higher than a new car. So is the interest rate on a used car loan. You can get a high-end second-hand car for the same price as a low-end new car. If you are purchasing a used car from a private seller, do some research to ensure there is no unpaid debt on the car and the vehicle is not stolen.
    • Car loan against FD: If you have a joint fixed deposit account, you can get the consent of the other person to apply for a car loan against the FD. The banks treat car loan against FD as an overdraft facility against the deposit sum in the FD account. The FD can’t be broken or closed once the car loan has been sanctioned against it.
    • Shop around for auto finance: Do some research online to find a suitable car loan offer. Visit a third-party comparison website to compare various car loan offers across several lenders and choose one that offers a low-interest rate car loan with a flexible loan tenure.

    Filing for bankruptcy is an option only if your liabilities far outweigh your assets. However, being bankrupt doesn’t mean all financial doors are closed. If you are driving a car that is not roadworthy, it is better to replace it rather than risk a vehicular/road accident. To get auto financing for the purchase of a new or second-hand car, you can put the above-mentioned tips to work.

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