My car has been repoed, how long can I get another car loan?
If your vehicle has been repossessed, you can usually get another car loan after a year from most lenders. There are steps you should take before you apply for your next car loan, and the longer you can wait, the better. Here’s how to get the most out of your pension situation.
Obtain a car loan after repossession
To have the best chance of getting a car loan after repossession, you need to go to the right kind of lender. Traditional lenders will generally not approve borrowers with a repossession of their credit reports. Subprime lenders, on the other hand, specialize in helping borrowers with less than perfect credit situations.
A repossession lowers your credit score and stays on your credit reports for up to seven years, but the effect it has on your credit score wanes over time. Since a repo reduces your chances of getting approved for an auto loan, it’s important to take as much time as possible to straighten out your next credit.
Typically, you can apply for a car loan from a subprime lender one year after repossession. If you’ve had multiple deposits, it may take even longer. However, since you can’t always wait to get another vehicle, you may be able to get a car loan right away by going to a dealership, Buy Here, Pay Here (BHPH).
These places are in-house finance dealers, which means they sell the car to you and finance it as well. It usually doesn’t matter whether you have a prior repossession, as these places usually don’t check your credit. All you typically need to get approved is qualifying income. Be prepared, however, as these dealerships typically charge high interest rates and require a down payment.
Prepare for a bad credit auto loan
Since you are likely to get the best deal from a subprime lender after a repo, you should prepare for a bad credit auto loan. If this type of loan is not something you have dealt with in the past, be aware that getting a bad credit car loan with one of these lenders has more steps and requirements than getting a car loan with good credit or go through a BHPH Dealer.
The first step is to get a copy of your credit reports and know your credit score. You can visit www.annualcreditreport.com to get a free copy of your credit reports. Thanks to the Fair Credit Reporting Act, you are entitled to a free copy of your credit reports every 12 months from each of the three national credit bureaus: TransUnion, Experian and Equifax.
Getting your credit score at the same time may incur a fee, or you can check with your bank, credit union, or credit card company to see if they offer free access to your credit score. You can also get your credit score through a credit monitoring service, which allows you to regularly stay on top of any changes in your credit throughout the year.
Once you know your credit situation, you can move on to other preparations for getting a car loan with bad credit. As we said, there are many requirements involved. Although the specific details vary by lender, you usually need documents proving your income, employment, residence, and that you have a working phone.
In addition to these factors, you are usually asked to provide a list of five to eight personal references, along with a down payment. When it comes to getting a car loan after repossession, the more down payment you can get, the better.
Usually, subprime lenders ask borrowers to provide at least $ 1,000 or 10% of the vehicle’s selling price, whichever is less. However, a larger down payment shows a lender a long way that you are serious about making that loan successful.
Auto Express Credit Tip: One thing that can help you get a car loan after a repo is to have a co-signer or co-borrower available.
Start your second chance car loan on the right foot
Now that you know you have to wait for a car loan after repossession, now is the perfect time to start building your credit and preparing for the bad credit car loan process. Once you think your credit has improved and enough time has passed, you’ll need to find the right lender for the job.
It’s here that Auto Express Credit We’ve helped hundreds of thousands of people connect with the right dealers for the job over the past 20+ years, and now we want to help.
To get started, simply complete our no-obligation auto loan application form, and we’ll get to work finding a dealership in your area that has the loan resources you need.