A repossession stays on your credit reports for up to seven years. However, this doesn’t mean you should give up trying to finance another car. A repo’s impact on your credit score lessens over time, so it’s often possible to get another auto loan before it falls off your credit reports. The key is to work with the right lender and to give yourself some time to plan, research, and save up a down payment.
Lenders That Accept Bad Credit and Repossessions
Dealing with the consequences of a repossession isn’t easy. Your credit score is affected, and so are your chances of financing another vehicle. As we noted, though, you’re not automatically disqualified from getting a car loan just because you have a repo on your credit reports.
What you generally need to do is apply with one of these two types of lenders:
- Subprime lenders – These lenders work through special finance dealerships, and know how to handle unique credit situations like repossession. Subprime lenders use your credit to qualify you, but also base your auto loan on other factors such as your income, employment, residence stability. You can read up about the requirements set by subprime lenders here.
- Buy here pay here (BHPH) dealers – BHPH dealerships are a type of in-house financing dealer, which means they're also lenders. Buyers can buy a car and finance it from the same place. A BHPH dealership is a good place to go to get financed with a repo on your credit reports because they typically don't even check the credit of applicants. Instead, they base approvals on your income. To understand more about BHPH qualifications, read here.
3 Things to Do before You Head to a Dealership
Before you even consider the type of lender you should work with, you need to do some prep work. It’s possible that even the lenders we mentioned could turn you down for financing if you’ve had a repossession in the past. However, the more prepared you are, the better your chances are of getting approved.
Make sure you do these three things before you apply for another car loan:
- Check your credit score and reports – You need to know your credit score and what’s listed on your credit reports. Most lenders look at your FICO credit score, and you can access it in many different ways. See if your credit card provider offers free access to it, or you can pay a small fee get it directly from the credit bureaus or FICO. For your credit reports, you’re entitled to a free copy every 12 months. These can be requested through www.annualcreditreport.com. Make sure all the information listed is correct, and dispute any errors immediately.
- Stay on top of all other payments – A surefire way to improve your credit score is to make all of your monthly payments on time. Your credit score may not be in the excellent category yet, but keeping up with your payments gives it a boost.
- Prepare a down payment – You usually have to make a down payment on a bad credit auto loan, regardless of the type of lender you plan to work with. How much you need varies, but subprime lenders generally ask for a minimum down payment of $1,000 or 10% of the vehicle’s selling price, whichever is less. BHPH dealers typically base the down payment requirement on the car you choose, so it's much more variable.
Find a Dealership to Work With
Just because you dealt with repossession in the past doesn’t mean you can’t get another vehicle. You just need to plan ahead and work with the lenders that can help you get a loan.
When you’re ready to take the next steps to getting a bad credit auto loan, post-repo or not, Auto Credit Express is here to help. We’re connected to a nationwide network of special finance car dealerships who are able to work with all kinds of credit situations. We can help you along the path if you simply fill out our safe and secure auto loan request form!