When can you get a car loan after bankruptcy?
Most first-time bankruptcies are discharged automatically after 9 months, or after 21 months if you have to make surplus income payments. Many lenders prefer to see your discharge papers before approving a loan.
Some specialized lenders will look at an application before discharge, with your trustee's agreement. Getting approved is usually easier, and rates are usually better, once you are discharged.
How long bankruptcy stays on your credit report
A first bankruptcy generally stays on your credit report for six to seven years after your discharge, depending on the credit bureau and your province. A second bankruptcy stays much longer. You can get a car loan well before it drops off; it just affects the rate.
Rebuilding after bankruptcy? Check your options
Takes about 2 minutes. No SIN needed to start and no hard credit check to see your options.
What lenders want to see
- Your discharge papers, or your trustee's information if you are not yet discharged.
- Steady income that covers the payment comfortably.
- Time at your current job.
- Any new credit since the bankruptcy, paid on time.
- A modest loan on a reliable used vehicle.
Using a car loan to rebuild credit
After bankruptcy, a car loan paid on time is one of the clearest signals to future lenders that you are back on track. Combine it with a secured credit card kept at a low balance. After one to two years of clean payments, find out how you can lower your payment with a better rate.