Getting an auto loan with bad credit and a repossession on your credit reports isn't always easy. A repo stays on your credit reports for up to seven years after the original delinquency date, although its impact lessens over time. Luckily, there are lenders out there who specialize in working with car buyers with less than perfect credit, and we can help you find them.
Types of Lenders Who Work with Bad Credit
When you have bad credit, your auto financing options are generally limited. While it’s possible to get pre-approved from your bank or credit union, you’re going to need to go through a special finance dealership or buy here pay here (BHPH) dealer more often than not.
Special finance dealerships work with subprime lenders, and these lenders specialize in approving bad credit car buyers for financing. Subprime lenders look at your credit score, but consider outside factors including income, employment, down payment, and residency, to name a few. When you finance with a subprime lender, you get the chance to improve your credit over time with an auto loan.
Buy here pay here dealers, known as tote the note dealerships in some areas, work a little differently than special finance dealers. BHPH dealerships offer in-house financing, which means they sell you a vehicle and finance you themselves, all in one place.
These dealers don’t typically run credit checks, and base approvals on your income and down payment. It’s easier to get approved for financing at one of these dealerships, but unless they say they report loans and timely payments to the credit bureaus, you aren't going to improve your credit over time with a BHPH dealer.
What both these lenders have in common is that in order to approve you, you almost always have to make a down payment, and you can expect a higher than average interest rate if you have bad credit.
The overall cost of the loan may be higher than you imagine, but you don't have to let this keep you from financing. One option to make a loan more affordable is making a larger down payment. Or, you can refinance the loan once your credit score improves in order to get a better interest rate.
Removing a Repo from Your Credit Reports
A repossession can drop your credit score anywhere from 60 to 240 points, depending on where it stands beforehand. If you have a repossession on your credit reports, you may be wondering how you can get it removed.
Unfortunately, if the repo is valid, you must wait until the seven years is up before it drops off. If seven years has passed, or the repo listed is incorrect, you can dispute the repossession error to the credit bureau(s).
In order to dispute an error such as an invalid repossession, you must submit a dispute letter to the reporting credit bureau(s). In the letter, make sure you provide evidence that proves the listing is incorrect. Once the letter is sent, the credit bureau(s) must investigate your dispute. If they fail to send you a plan of action letter within 30 days, the mark is automatically removed.
Finding a Dealership to Work With
Now that you know where you need to go, how do you get to the right dealership? With Auto Credit Express, of course.
For over 20 years, we’ve been helping bad credit car buyers get the financing they need by connecting them to local dealers that have the right lending resources available. To get started, fill out our free and simple auto loan request form, and we’ll get right to work connecting you to a dealership near you.