Need an Auto Loan with 633 Credit Score

by Rondelu
(Washington DC)

Question: I have a 633 credit score and need an auto loan. I have a discharged chapter 7, june 2010, three credit cards {prime banks}, Navy federal and capital one denied me, who should I try for an auto loan?


Answer: Hi Rondelu,

The biggest problem I see you having here is the short time since your bankruptcy. Most lenders are looking for a minimum of 1 year since the BK and 2 years is more common.

That does not mean you won't be able to get a loan, but you may not be able to get a loan on your own. There are many lenders that will loan you money under the circumstances, but they usually do not loan direct to the consumer and the loan has to be arranged through a car dealership.

If you can wait another 6-18 months, then you will have a better shot at getting your own financing. I'd suggest trying to get a small credit card or some other form of credit to start rebuilding after your BK. If you are able to do this, then I'd think a credit union (possibly even Navy Fed) will be your best option.

If the three credit cards you mentioned were not included in the bankruptcy, then those will probably work if you continue to pay those well. Again, I think it will just take more time since the BK.

If you can't wait that long, then you'll probably need to arrange your loan through a dealer (as mentioned above) and be willing to settle for some less than favorable terms.

These terms will probably mean high rates 18%+ and/or short finance terms. If you do go this route I'd suggest not buying too much car.

What you want to do here is buy something that you "need" and use this loan to rebuild your credit. A well paid car loan is an excellent way to rebuild credit. Once your credit is on its way back up, then you can look to buy something you "want".

A 633 credit score is not horrible - especially so soon after BK - and that leads me to believe you probably had good credit prior to the bankruptcy, so rebuilding won't be quite as hard and shouldn't take quite as long.

If you want to continue to look for financing on your own now, then I'd think a credit union would be your best shot; although, you'll probably have to inquire with quite a few to find one that will work with you at this time (if any are willing to).

Hope this helps,
Justin