How to Get a Personal Loan After Bankruptcy?

How to Get a Personal Loan After Bankruptcy?

At some point in time, you have to take a personal loan — it could be to repair your house or buy a car. After bankruptcy getting a personal loan will be tough, but it is not essentially impossible. Some lenders will provide the no-check loan after bankruptcy, but you need to know that they have very high-interest rates that will lead to another debt trap. But, the good news is you still can get the loan after bankruptcy. Though it may not be very simple, and you may need to pay a higher interest rate or fee, but it is completely possible.

How to get loans after bankruptcy?

For getting loans after bankruptcy, you will have to find a bankruptcy-friendly lender that is renowned and keen to handle your case. There’re a lot of lenders who work with borrowers whose scores are damaged after bankruptcy. 

 

You must check out the loans from credit unions and banks, as well. Credit unions can be the best choice as they generally tend to have lower interest rates than traditional banks. Suppose you are searching for a personal loan following bankruptcy, then here are some steps that you must take before borrowing.

 

Ask for a credit report & monitor your score

Your first step in taking proper control of the credit is looking for a comprehensive credit report from the credit bureaus. Even though this report does not show your score, but it will show your entire financial history. Also, you can ensure your finances are updated.

 

Determine if you need a loan 

A personal loan is one major financial obligation, hence you need to make sure you could afford its monthly payments. You can add up the costs linked with every loan offer that you are considering to see what you are getting into. Don’t proceed if you are not very sure to pay monthly by its due date.

 

Give proper explanation

You can consider preparing a letter that explains your circumstances, which led to bankruptcy & how you are remedying an issue. Suppose the bankruptcy was because of the medical costs or another unforeseen issue, then you may get a little break. But, make sure you give a proper explanation.

 

Think of taking out a personal loan

The secured loans have very less stringent needs than the unsecured loans as they need collateral. With the secured loan, you can back up your debt with assets like your investments, savings, home, or car. Securing the debt will get you lower rates of interest. However, with this kind of loan, you are risking the assets. The debt collectors can seize them in the event you are not able to repay the debt. Hence, before risking your precious possessions, ensure you are confident that you will be able to pay back your loan.

 

Loans after bankruptcy can improve your credit

If you want to know how you can get the loan after bankruptcy will be starting with the smaller loan. Some loan types will help you to build credit. The banks and credit unions provide credit-builder personal loans for borrowers with bad credit. Such loans allow you to borrow a small amount, which is put in the savings account or CD. So, you can make the fixed payments monthly until your loan is completely paid off. After that, you can easily access the deposited funds.

 

Can You Get Loan After Bankruptcy?

Legally you can get the loan after bankruptcy. But, it depends upon where the bankruptcy is filed, also you might not get credit during your bankruptcy without the court permission. However, when the bankruptcy is done, your capability of getting credit generally depends on your score and various other factors. Sadly, your credit score is probably very low after the bankruptcy.

 

While applying for the loan after bankruptcy, it will be good if you can evaluate the overall cost of your loan with the fees and interest to ensure that it is affordable over its full term & it is reasonable, knowing what you will use this for. The high rates of interest are par for this course; thus get prepared for the rates you didn’t face pre-bankruptcy.