Having your car repossessed is not a pleasant experience... for anyone. Often, consumers purchase a vehicle with an auto loan while their financial situation is good and one major financial incident can send a good paying loan customer into a tailspin of non-payment. What makes vehicle repossession even more difficult is the fact that the consumer needs the vehicle as a means to get to work, and getting to work is likely the only way out of the financial situation that put them into repossession in the first place. One unexpected medical issue, layoff or difficult circumstance can negate your ability to make your car payment, and send you on the road to repossession. A repossession can be catastrophic for a family that depends on a vehicle to get to work, and make it impossible for consumers to turn the situation around. If your car has been repossessed it will be more difficult for you to get a loan, much less a good interest rate. Most prime lenders and banks will not loan a vehicle to a consumer that has a recent repossession, but there is hope. There are lenders and dealerships that will lend money to sub-prime borrowers including those with a history of repossession. Getting a car will get you back on the road and one step closer to fixing your financial mess..

 

1. Pay Off Your Loan

Now hold on.. You're probably thinking "If I could have paid off the loan, I wouldn't be in this situation to begin with." and you're right. We're not trying to aggravate you any further by suggesting you do something that is quite obviously impossible. What you may not know is that when a car is repossessed it is resold, usually at an auction, to pay off the remainder of the loan. The difference in that amount (minus fees and other charges) is what you owe after the repossession. It may not be an exorbitant amount... It may only be a few hundred dollars that you could pay off completely. That could stop any further collection and damage to your credit score, making it easier (and cheaper) to get another loan.

 

2. Contact Your Lender

The old adage "you never know until you try" rings true... even in the case of repossession. Your prior lender may be willing to work out an agreement with you to avoid further credit damage. You'll need to find out how much you really owe after fees and credit from the sale of your previous vehicle. There's no negative in attempting to negotiate with your lender.

 

3. Call The Credit Bureaus

One simple credit fix that is less well know is this: the credit bureaus will attach a short note to your delinquent credit items at your request. It won't change your score or remove the item, but it will give potential lenders reviewing your credit a short explanation of your side.

 

4. Get Your Credit Report

Your repossession will have an affect on your score and history but until you pull your report, you have no idea where you stand. The effect of the repossession may not be as bad as you think, especially if you have other accounts that you have been able to pay on time. By law, you are permitted to view your credit report from all three credit bureaus one time per year for free.


5. Do What You Can To Fix Your Credit

It's possible that there are other, easily fixable negative items on your report that are damaging your score. Even with a repossession, repairing other items on your report could mean the difference between driving or walking, and a percentage rate of 2 or 20 percent. If you can, wait as long as possible before purchasing another car. While this is not feasible for everyone, letting some time pass since your repossession and even opening a few secured credit cards can do wonders to your score.

 

6. Start Saving A Down Payment

Unfortunately if you have a recent repossession, the only way you will be able to get an auto loan is with at least a minimal down payment. Start saving what you can. By the time you find a lender and vehicle, you will hopefully have enough for your down payment.

 

7. Be Reasonable

"The sky is the limit" is no longer an option for consumers with recent repossessions. It's likely that you will not be able to get a newer model expensive vehicle. You may have to bring your expectations down a few notches. There is a limit to how much a sub-prime lender will allow you to borrow and you should be searching for an automobile within that range.

 

8. Find A Lender Before You Find A Car

Many consumers that are new to sub-prime lending make the mistake of searching for the car and then searching for the credit. For those with recent repossessions, you're going to need to find out how much a lender will approve you for before you find a car that you love.. and can't afford.

 

9. Visit A Dealer That Offers "Special Financing"

To find a dealership that works with sub-prime borrowers, search for dealers that advertise car loans for bad credit or special financing. These dealerships will have sub-prime lending options that mostly consider your income as opposed to your credit. You will pay more in interest, but they will be able to get you back on the road.

 

10. Buy Here Pay Here

If all else fails, you can look for a dealership that offers Buy Here Pay Here. If you have no income, Buy Here Pay Here will be pretty much your only option. You'll need more for a down payment and will also have a higher interest rate, but they will be able to get you a car loan.