How to Refinance a Vehicle With a Bankruptcy

Although refinancing a vehicle with a bankruptcy on your credit report is possible, it is difficult. It all depends on how long ago your bankruptcy was and what your credit behavior has been like in the intervening years. Bankruptcy appears on a credit report for 10 years and must be reported whenever requested on a loan document. Auto loans made to people with a recent bankruptcy usually have a very high interest, so it may be difficult to acquire a refinance loan at a lower rate than the original loan.

Instructions

1

Compare rates offered by various lenders. Many major lenders will not refinance loans for people with bankruptcies. Seek lenders that specialize in providing auto loans to people with poor credit ratings.

2

Expect to pay a substantial down payment on the refinancing loan. Lenders prefer to have some kind of security when signing agreements with individuals with a record of bankruptcy. Look carefully at any high fees or penalties on the loan agreement to ensure that you are getting a worthwhile deal on the refinancing.

3

Maintain a good driving record. It will be easier to get a refinancing loan if the lender can be reasonably assured that you won't get into an accident and enter default because of any obligations you may incur because of it.

4

If possible, document your employment and income when applying for a refinance loan. If you can show that paying the obligations of the loan is well within your means and that it will save you money, this will strengthen your financial position and thus improve your chances of approval.

5

Monitor your credit report for errors and other issues. Even minor problems after a bankruptcy can act as a red flag for lenders that service customers with a bankruptcy record. Correct any mistakes that show up and resolve any late payment issues as soon as possible.

6

Consider finding a co-signer with a good credit rating for your vehicle refinance. Make sure that the co-signer is aware that he will be responsible for the principal, interest, fees, and penalties of the loan should you default on it. Finding a co-signer may enable you to get a much higher quality refinance loan than you would be able to otherwise.