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How to Buy a Car after Bankruptcy [Our 4-Step Process]

How to Buy a Car after Bankruptcy [Our 4-Step Process]

There are some things you must be aware of when trying to buy a car after bankruptcy in Ontario. The good news is that your sacrifices during the bankruptcy will give you a new financial lease on life, but there are some unique challenges that you must overcome, as our Woodstock auto loans team explains.


Starting all over


During your bankruptcy, all of your creditors would have written off your debt; while this erased your legal obligation to repay the creditors, the actual bankruptcy will stay on your credit report for up to seven years.


There is a good chance your credit score is in the 400s or even lower because there has been no positive activity since your bankruptcy trustee declared you insolvent.


You must start rebuilding your credit by signing up for a secured credit card from Capital One or Home Trust.


These secured credit cards are not the same as prepaid cards; when you use the secured cards, you will receive an invoice every month that needs to be paid by the due date.


So long as you make your payments on time, your credit score will start to improve. This is the first step to rebuilding your credit, which takes time, but it will be worth it in the long run.


Budgeting for your new car


Everyone who has gone bankrupt must attend classes on budgeting; you would have learned how to create a budget.


Since you do not have any credit-related debts, there should be a significant portion of your take-home pay available for discretionary spending like making a car payment.


You will need to set aside at least five hundred dollars per month which is the average car payment in Canada.


Along with the amount for your car payment, you must factor in the cost of gas, insurance, and other operating costs that come with owning a car.


You may feel overwhelmed, but this is a major step toward rebuilding your life.


Having the correct car-buying expectations


The average price of a new car is over forty thousand dollars, and since your credit score is low, most lenders will not issue a loan.


Your best option is a loan for a used car; there are many excellent used cars out there in the market, so you have plenty of great options available.


Where to get a Woodstock car loan after bankruptcy


Most mainstream lenders are not willing to deal with borrowers who just got out of bankruptcy; there are options available.


Your best option is to go through a dealership in your area that has extensive knowledge of working with borrowers just like you.


Once the dealership has discussed your unique situation and has a clearer picture, they will be able to pick a lender that is best suited for you.


Remember, the dealership and lender all want to give you a car loan; they just need to make sure you meet the underwriting criteria.


The dealership will also give you valuable advice on what steps you can take to rebuild your credit score. By going through the dealership channel, you are going to have an amazing experience so contact the dealership today.


We’d love to help you buy a car after bankruptcy in Brantford. Simply fill in the form below and we’ll get back to you ASAP or see our selection of new and used cars at our Brantford dealership. 


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