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The amount of a bankruptcy influences the interest rate of your future car loan.

When you’re forced to declare bankruptcy, you free yourself of your past debt, but you got to reconstruct your name for future loan. There’s a cost related to that which is a higher interest rate.

If, when you start your steps to declare bankruptcy, you know that you’ll need a car loan afterwards, it’s important, before declaring it, to see what financing options will be offered to you.

The loaners in specialized credit have different approbation criteria. Most of them require that the bankruptcy amount got to be over 10 000$. Any bankruptcy under that amount will be declined by some and approved by some others, but with high interest rate. So instead of rebuilding your credit with promotional rates (10.99%-17.99%), you’ll get rates that are higher (24.99%-29.99%). In some case, the amount of the bankruptcy is so low that even private loaners or 3rd chance to credit don’t want to loan any money.

Their mindset is easy to understand, if you just declared bankruptcy for under 10 000$ and you want to get the same amount for a car loan. The risk of you not paying is too high for them.

We understand that declaring bankruptcy isn’t an easy decision to take and it’ll follow you on your credit report for the next 6 years. So, the best advice we can give you is to get the right information before going down that road. When you shop for something, you go around to see where it is the best for you, do the same with a bankruptcy. Get information from a couple of syndics to see what are the options that are offered to you and the financing plan that are offered, to make sure you take the best decision for yourself.

We can analyze your credit report for free at

Katy Fontaine august 9th 2018

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