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
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.