Can I Finance a Car if I Have a Bankruptcy



For individuals who have experienced financial difficulties and filed for bankruptcy, securing financing for a car may seem like an impossible task. Bankruptcy can impact your credit score and make lenders skeptical about your ability to repay a loan. However, despite the challenges, it is indeed possible to finance a car even if you have a bankruptcy on your record. This article will explore the options available to individuals with a bankruptcy who are looking to finance a car, including subprime lenders, buy here pay here dealerships, and credit unions. Let's dive in and explore these options in more detail.

Subprime Lenders

One of the most common options for financing a car with a bankruptcy is to work with subprime lenders. Subprime lenders specialize in providing loans to individuals with less-than-ideal credit histories. These lenders are more willing to take on the risk associated with lending to bankruptcy filers, although they often charge higher interest rates to compensate for the increased risk.

Subprime lenders consider factors beyond just your credit score when evaluating loan applications. They take into account your income, employment history, and other financial details. While having a bankruptcy on your record will make it more challenging to secure a loan, if you can demonstrate stable income and the ability to make timely payments, you may still be able to secure financing.

Buy Here Pay Here Dealerships

Another option for financing a car with a bankruptcy is to consider buy here pay here (BHPH) dealerships. BHPH dealerships offer in-house financing, meaning they finance the cars themselves rather than relying on third-party lenders. This can be particularly advantageous for individuals with a bankruptcy, as BHPH dealerships are typically more lenient when it comes to credit history.

While BHPH dealerships may be more willing to provide a loan, there are some downsides to consider. These dealerships often charge higher interest rates and may have stricter payment terms compared to traditional lenders. Additionally, the car selection at BHPH dealerships may be limited, and the vehicles offered may be older or higher-mileage.

Credit Unions

Credit unions can also be a viable option for financing a car if you have a bankruptcy. Credit unions are member-owned financial institutions that offer a range of banking services, including car loans. While credit unions do consider credit history when evaluating loan applications, they tend to have more flexible lending criteria compared to traditional banks.

Credit unions often prioritize your relationship with the institution rather than solely relying on your credit score. If you have been a long-standing member of a credit union and have shown responsible financial behavior outside of the bankruptcy, you may have a better chance of securing a car loan. It is advisable to contact local credit unions and inquire about their lending policies for individuals with a bankruptcy.

Rebuilding Your Credit

Regardless of the financing option you pursue, it is essential to work on rebuilding your credit after bankruptcy. Taking steps to improve your credit score will not only increase your chances of securing a car loan but also open up opportunities for better interest rates and terms in the future.

To start rebuilding your credit, consider the following steps:

1. Pay all bills on time: Consistently making timely payments demonstrates your ability to manage your finances responsibly.

2. Use credit wisely: Use credit cards sparingly and pay off balances in full each month. This demonstrates responsible credit usage and can gradually improve your credit score.

3. Monitor your credit report: Keep an eye on your credit report to ensure accuracy and address any errors promptly. You can access a free copy of your credit report from each of the three major credit bureaus once a year.

4. Apply for a secured credit card: Secured credit cards require a cash deposit, which acts as collateral for the credit line. These cards can be an excellent option for rebuilding credit, as they are often easier to qualify for than traditional credit cards.

5. Consider credit-builder loans: Credit-builder loans are specifically designed to help individuals rebuild credit. These loans typically require a deposit or collateral and can help you establish a positive payment history.

Remember, rebuilding your credit takes time and patience. By consistently practicing responsible financial habits, you can gradually rebuild your credit and improve your financial standing.


While bankruptcy can present challenges when it comes to financing a car, there are options available for individuals in this predicament. Subprime lenders, buy here pay here dealerships, and credit unions can all provide avenues for securing a car loan, albeit at different terms and conditions. Regardless of the path you choose, it is critical to take steps towards rebuilding your credit after bankruptcy to improve your financial future.

22 October 2023
Written by John Roche