Yes, buying a car after foreclosure is possible. Several things will be considered, each will directly affect your car loan in predictable ways.
Foreclosure Less Than 180 Days Old
The first thing considered is how long it has been since the foreclosure. If your home is still in active foreclosure proceedings, it is nearly impossible, and in some states illegal, for you to get a new loan for anything. If the foreclosure has been settled recently (within the previous six months) you will be forced to deal with a specialized, subprime lender. You will also have to offer a higher down payment than you may expect. Lenders have been known to ask for as much as 50 percent down based on a recent foreclosure and the severity of the hit to your credit score. Your interest rate will be in excess of 13 percent and you may be required to agree to a shorter loan term.
More Than 180 Days After Foreclosure
If the foreclosure is more than six months old, you may still have to deal with a specialty lender, but the down payment and interest rate should be lower. You should expect to offer a down payment in the 20-30 percent range and your interest rate may be as low as 10 percent. Most traditional banks won’t work with you yet, on account of the severe hit your credit score has taken, but there are plenty of subprime auto lenders and dealership special finance departments that can assist you.
Fortunately, our services are uniquely suited to consumers in such a predicament. We work with lenders and dealers who specialize in helping people with credit problems like foreclosure. Take a minute to submit your online application, and we’ll put you in touch with a finance specialist who can help you assess your options and find the loan you need.
The wisest thing you can do after a foreclosure is to maintain on-time payments on all of your other obligations. If this is a foregone conclusion (i.e. a bankruptcy), you should obtain a secured credit card so that you can begin rebuilding a solid credit history. Making 12 on-time payments on the new line of credit may show lenders that the foreclosure and bankruptcy were aberrations, and not your credit future. This will simultaneously increase your chances of approval and decrease your rate of interest on future loans.