Getting a car loan after repossession can be a challenge, but it is not impossible. In most cases, having a car repossessed is due to unfortunate financial circumstances. Unemployment, underemployment, unexpected medical bills, increased rent or mortgage, and the like, can deplete savings and leave you strapped of cash. The result can lead to falling behind in paying bills and making car payments on time. If you fall too far behind, you open the door to a having your car repossessed.
Repossession of your car will blemish your credit report for seven years following the date the loan went delinquent. At first, your score will drop significantly, making approval for a loan difficult. However, the impact on your credit score doesn’t have to last as long as the repossession itself. You can do something about it. How to get a car loan after repossession will depend on how well you manage your credit after the car is repossessed. To do so, here are a few tips to help you secure financing after having your vehicle repossessed.
Improve Your Score if Possible
When applying for a car loan after repossession, potential lenders are going to review your credit report to see how well you have managed to respond financially. Therefore, the first tip is to work on shoring up your credit before you apply for a new car loan. Doing so will help ensure you receive a loan and will go a long way in getting a competitive interest rate. Whatever financial issues or circumstance led to having your car repossessed, take time to work to resolve those issues. If you were dealing with heavy debt or job loss, you will want to show the lender that you have the debt under control or that you have settled into a steady job that has allowed you to pay down that debt.
The most heavily weighted part of your credit report is the record of your payment history. If you want to improve your credit score the fastest way to do so is by regularly paying your bills on time. Paying your credit cards, loans, lights, phone, utilities—every single bill must be paid on time. Showing that you are making regular payments on time will improve your credit score and place you in a favorable position when applying for a car loan after repossession.
Review Your Credit Report
As you work on improving your credit score, be sure to get a copy of your credit report and fix any errors that appear on it. Tackling your credit report woes may lead to the removal of items that are not yours or should not be on the report. Ask the credit bureau(s) to verify any questionable items on the report and get the response in writing or online via email. Wait until the credit bureau responds with a resolution, preferably in your favor, if not, you can dispute the findings to have it removed. Doing so will improve your credit score.
As you work your way through the financial crisis, begin to put some money away for a down payment on a used, but reliable car. Lenders view a down payment as a serious effort on the borrower’s part that he or she has regained control of their finances. If you can save $500-$1,000 as a down payment you’ll grab a lender’s attention.
Secure a Loan with the Right Institution
One dealer in Arizona you can rely on to get a car loan after repossession is Auto Action. Auto Action offers a simple loan approval process for those rebounding from credit problems. Shop with confidence when buying your next car, and enjoy Auto Action’s AA Advantage Program, a worry-free, limited warranty with 12 month/12,000 mile vehicle coverage, one-year free oil changes, and Total Loss Protection. Your vehicle is also equipped with an anti-theft device.
Bouncing back after a car repossession will take time and effort. Begin by working on improving your credit score, catching up on your bills and pay them on time. Then, stay current on your monthly payments. Soon enough your credit will improve. No matter what stage you are in financially, every day take one step in the direction that will rebuild your finances and your efforts will be rewarded.