Financing a Car Loan After Divorce: How to Get Approved
Financing a Car Loan After Divorce: How to Get Approved
Posted on May 4, 2023
While no one wants to discuss the topic of divorce, roughly half of all married couples will have to face this at some point in their relationship.
Unfortunately, your finances can be turned upside down as a result of divorce.
That’s why our car loans team is going to cover some of the challenges you will face when looking for a car loan after divorce and how to overcome them.
Credit Challenges Associated With Divorce
Most couples have joint accounts; if the judge has assigned the debts to you during your divorce settlement, you are fully liable for the debts.
Usually, before a couple files for divorce, their credit cards and lines of credit are maxed out, so you could be facing a massive amount of debt that will be attached to your credit profile.
Your credit score will most likely take a nosedive.
One of the variables that go into calculating your credit score is credit utilization; this is a ratio that compares how much debt you are carrying in relation to how much you have available.
Since all of the debts are on you, your credit utilization rate is going to shoot up, and your credit score will plummet.
This is not “gloom and doom” We are going to prepare you, so you know what to expect.
Developing a Game Plan to Tackle Your Credit Challenges
You will need to prepare a budget and try to squeeze the maximum benefit from every dollar.
Aside from your credit obligations, do you have to pay alimony or child support? These amounts are going to be factored into your debt-to-income ratio, so you must add them.
Once you have tallied all of your debts, including those ordered by the courts, you can start looking for lenders that will give you a car loan.
Finding the Right Vehicle for Your Situation
You may want to buy a brand new car, but given the amount of debt you are carrying, plus the credit issues, your best option is a used car.
Do not take this as a defeat; you have a game plan to get back on a solid financial footing, and this is the first step.
You will not be able to find a viable lender on your own, the Internet is saturated with websites that are touting car loans, but these websites are just middlemen who resell your details to other lenders.
What you need is someone who understands your situation and can structure a car loan that makes sense.
The way you can access these lenders is by working with a car dealership that has assisted other divorced clients in getting a car.
These dealerships have “seen it all,” so they will know what it takes to make your deal work. After the dealership has completed its assessment, they will pick the lender that will give you a great deal.
While to some, divorce is an ending, but it is your new beginning, so savor the moment as you drive home in your new car.