Can I get a car loan after repossession?

Immediately after a car repossession, obtaining a traditional auto loan can be difficult. However, there are ways to get into a vehicle after a while, and you can even work to repair your credit for future purchases with an auto loan.

The lender gives, the lender takes

When you finance a vehicle and start to miss payments, the lender reserves the right to take it back. Repossessions can happen after a single missed payment, but it depends on the lender you are financing with and the language of your loan agreement.

Collecting your car is usually a difficult thing to do, sometimes requiring you to pay off the entire loan balance in one lump sum. For many borrowers, once the vehicle is gone, it is difficult to get it back.

Going forward, it’s important to focus on repairing your credit score after the repo, as this usually causes significant damage. The evil does not last forever, however! Repeats can impact your credit score for up to seven years, but with each passing year the effects wane. The older an account is on your credit reports, the less it can hurt your credit score.

A car loan has the potential to heal your credit score after a repossession, but getting a car loan after a pension can be difficult if you don’t know where to go next. Most traditional lenders don’t approve recently repossessed borrowers, and instead prefer that you wait at least a year before financing again. However, this is not always an option.

You generally have two main possibilities to check after a repo: internal financing or subprime financing.

Internal auto financing

Internal funding means the car dealership is also your lender. These places are often referred to as BHPH (buy here, pay here) dealerships or bring back lots of used vehicles. Whatever name they have, they are a good resource for borrowers with bad credit to get into a car quickly.

These lots only sell used vehicles and usually require a large down payment. These dealerships are likely to verify your income, your driver’s license, and will require cash up front so you can be considered for auto financing.

What they usually don’t check are your credit reports or your credit score. With a recent or even multiple repossession of your credit reports, an inside finance broker might be the solution to get into another financed vehicle.

However, a car loan that you get from a BHPH dealership is not known to repair your credit. These loans may not be reported to major credit reporting agencies. A loan that goes unreported does not have the ability to repair your credit even if you never miss a payment. If you are concerned about repairing credit after a repo, a subprime auto loan may be right for you.

Subprime auto loans after a repo

If you have credit problems, subprime financing should be your choice. Those who have had a repossession, past bankruptcy, or just bad credit habits in the past can turn to subprime lenders for a car loan.

Subprime lenders are registered with special finance brokers and they look at more than just your credit reports during the approval process. To determine your ability to take out an auto loan, they look at the many moving parts of your financial stability. This means examining your income and expenses, your stability of residence and many other things.

To take out a subprime auto loan, you must also have a down payment. Subprime lenders typically require their borrowers to have at least $ 1,000 or 10% of the vehicle’s selling price (sometimes whichever is less). A trade with equity can also help meet this requirement.

However, those with a repo that is less than a year old may not be eligible for subprime auto finance. Additionally, those who have multiple repossessions appearing on their credit reports are unlikely to qualify.

Once these repos get older a bit, a subprime car loan could be your path to credit repair. Subprime lenders report their auto loans to the credit bureaus. With timely car payments and good management of your other expenses, you could be on your way to repairing your credit after a repo.

Dealers for Bad Credit Borrowers

Your chances of getting into a vehicle after a repossession are not cut down, as there are dealerships who can work with bad credit borrowers.

If you want to avoid having to search for a dealership that has signed up with bad credit auto lenders, start here with us at Express auto loan. After completing our free auto loan application form, we will look for a dealer in your area. There’s never a requirement to buy anything, so let us help you get back on the road.

About Dora Kohler

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