How does bankruptcy affect your car loan?

Can I get a car loan if I've filed for bankruptcy?

Bad credit happens to good people. Bankruptcy – probably the worse credit situation of all – also happens to good people. If you’ve found yourself in a situation where you’ve filed for bankruptcy, does it make sense that you shouldn’t be able to own a car? How will you buy groceries, get to work or bring your kids to school without a vehicle? Unless you’ve got a lot of hidden cash, or a benevolent friend, you’re probably wondering if you can get a car loan if you’ve filed for bankruptcy.

The answer is yes

Even if you’ve filed for bankruptcy you can still get a car loan. However, your interest rates will be higher.

To compensate for any potential problems in the future, car loan companies will charge a higher interest rate to someone who’s filed for bankruptcy than they would to someone who has good credit.

It’s generally true that the better your credit, the better interest rates you’ll receive for car loans. That’s why it’s important to shop around and compare when you have iffy credit; there are a lot of providers out there that are able to provide deals for those with less than perfect credit, or even bankruptcy.

How to avoid paying more

Initially after you’ve filed for bankruptcy, your car loan will come with higher interest rates. Making a large down payment can result in lower rates, but people who have just filed for bankruptcy generally don’t have enough cash to make a large down payment.

Instead, you should work towards improving your credit by making timely car loan payments and getting a secured credit card that you pay off at the end of every month. After some time, your credit will improve. Use this better credit to get a new car loan at a lower interest rate and you will instantly save money.


There are all types of people in the world and some have good credit, while others have bad credit. If you want to get a car loan after filing for bankruptcy, don’t worry. There are many companies willing to lend you money to buy a car, although you will have to pay more for the privilege of borrowing than someone who has not filed for bankruptcy.