After a Repossession: How Can You Get a Loan?

Just because you have had a car repossessed doesn’t mean you can never get another car loan.

The best idea is to wait as long as possible before trying to secure another auto loan, but if you simply cannot wait for new transportation you do have options. In fact, no matter how bad your credit may be there are ways to secure a new auto loan.

First, if there is any unpaid balance remaining on your previous auto loan, this would be the difference between what you owed and what the vehicle was resold for, you should make arrangements to pay this off as soon as possible. Leaving this debt unpaid will only further harm your credit and make it that much harder to get a new auto loan.

If you decide to pursue an auto loan from a sub-prime lender be aware you will likely pay a much higher interest rate and possibly pay additional fees. If you can open another line of credit and make the payments on time for several months your credit rating should improve, even with the repossession in your history. The longer you continue to do this the better your credit rating will be and the more likely it will be that you will be approved for a new auto loan. Start by looking at smaller dealerships with “buy here, pay here” programs.

After a year or two you should be able to find banks more willing to make a loan to you for a new vehicle, but the longer you wait, the better.

Finally, contact the major credit reporting agencies, TransUnion, Experian, Innovis and Equifax. They will allow you to post a short note beside each item which appears on your report. You cannot have delinquent items removed but you can at least make an explanation for them so companies checking your credit report will know your side of the story.

The best idea is to avoid car repossession all together, but things happens. So if you find your vehicle repossessed don’t despair. Instead, start making arrangements to clean up your credit as soon as possible.

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