You’ve had a car repossessed, just like millions of other Americans. So, what now? Can you ever get an auto loan again? Will you have to pay cash for any vehicle you want to purchase? Worse, will you have to go without a vehicle? The answer to all these questions is no – You can still get a car loan following repossession. It may take a little extra time and effort, but it’s absolutely possible.
Rely on these proven strategies to establish yourself as a responsible borrower once again:
Study Your Credit Report
Lenders extend offers based on lots of factors, not just whether you have a repossession on your record. If you are worried about being turned down, take some time to really study your credit report. You may find issues you were unaware of or even mistakes you can have removed from your record. Request a copy of our credit report, then take as much time as you need to understand exactly what it says.
Raise Your Credit Score
A repossession looks bad on your credit report. One way to counter your image as a risky borrower is to boost your credit score after the repossession. It shows lenders you are making an honest effort to repay debts and be financially responsible. Ways to raise your score include paying your bills in full and on-time as well as only applying for the credit you need. It takes time and responsibility to boost your score, but once you do your repossession will look a lot less negative.
Find Someone to Cosign the Loan
Cosigning a loan is when you share responsibility for the loan with someone who has better credit than yourself. The person who cosigns agrees to pay off any missed payments or the entirety of the loan if you stop paying. Borrowers with a repossession but also a cosigner are considered a lot less risky. Make sure the cosigner is someone you know and trust who also has a strong credit score. Cosigning is a big responsibility, so don’t make any formal agreements until you understand exactly what is involved.
Start Saving for a Down Payment
Having a bad credit score doesn’t mean you can’t get financing. Options like after-bankruptcy car loans allow almost any driver to get the money they need to buy the vehicle they want. Even if approval is likely, it helps a lot to be able to put down a sizable down payment. The recommended amount is 20 percent of the vehicle’s value, which can be a significant figure. Start saving now to maximize your chances of being approved for a bad credit car loan.
Select the Best Options
You need to make two important decisions once you feel ready to start shopping for a vehicle. First, find something that fits into your budget, both on a monthly basis and overall. If you are trying to recover from a repossession the last thing you want is to face another one. Be honest about what you can afford, then shop within your means. The second decision is to choose the right auto lender. Not everyone will work with borrowers who have bad credit, but some actually specialize in it. Identify lenders that work with bad-credit borrowers, then research who has the best rates and terms.
One mistake does not have to define your entire financial life. In fact, our system of credit is based on the idea that people can build up their credit-worthiness over time. So, don’t let a repossession stop you from researching vehicles and applying for financing. Instead, be honest about where you are and tenacious about getting to where you want to be.