Rebuilding credit after a bankruptcy is often one of the most frustrating and difficult things someone will ever face.  There aren’t very many lenders willing to provide a loan to someone who has a default on their record, but there is hope.  Once a bankruptcy has been discharged, a post-bankruptcy auto loan can help a consumer begin to rebuild their ruined credit.

An auto loan is different from many other loan types.  The car is the collateral on the loan.  Because of this, lenders see auto loans as less risk sometimes.  This is actually good news for borrowers that have been through bankruptcy.  Because the car provides security on the loan, they stand a much better chance of getting approved.   However, these types of loans usually come with a higher down payment and higher interest rates.

A down payment of 10% is usually considered enough, but if you can afford to pay more than that, you should.  Having a down payment not only makes you look more serious to lenders, it can also reduce your interest rate and your monthly payments.  Making sure you have a down payment will leave you in a much better position to negotiate with a lender.