Amongst the many financial challenges facing Alabama residents in today's economy, bankruptcy and foreclosure can have an impact on one's ability to receive loans in the future. Financial problems are often a result of major income changes or unemployment, which is usually unavoidable.
Fortunately, filing for bankruptcy or facing foreclosure does not prevent a person from obtaining an auto loan in the future, contrary to popular thought.
Prior to 2008, having a foreclosure or bankruptcy on your credit report, resulted in an automatic denial of your auto loan application. However, lenders are now more likely to investigate further into your credit report in order approve a loan, rather than automatically rejecting applicants with a bankruptcy on file. Currently, some lenders are more understanding of such events, and will compare the debt to income ratio with a more open mindset before automatically denying a loan. This will allow more individuals the ability to take out auto loans in order to purchase a necessary means of transportation for themselves or their families.
Although this is good news for those on the market for a car, buyers are still bound to make their payments on time. Missing or late payments can lead to repossession of the vehicle without warning in order to satisfy the money owed. The lender often does not need a court order in order to take such action, but laws relating to repossession vary from state to state.
Prior to the repossessing a car, many lenders may be willing to negotiate; however, once the repossession has occurred, there may be a variety of different actions an individual has to take in order to redeem their vehicle.
Obtaining an auto loan can seem like an uphill battle for those who have struggled with money in the past, but there are ways to restore personal credit and confidence among lenders. Fortunately, lenders have also adjusted to the financial realities facing many Birmingham families today.
Source: Auto Credit Express, "Auto Loans after Foreclosure," Steve Cypher, Oct. 23, 2012