After Car Repossession: How to Get a Loan?

It's not always easy, but you can get a loan after a car repossession. Most major lenders won't give you a loan of any kind after car repossession, but there are always options out there for even the worst credit situations. You should consider the benefits of waiting for some time to pass before you try to finance another car unless you must have the car for transportation and don't have any other options.

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If you owe a balance on the repossessed car, like the difference between what you owed and what the car resold for as well as repossession fees like storage and prepping for auction, pay it as soon as possible. Avoiding this debt only further damages your credit because you'll have the car repossession as well as the delinquent balance on your report. Get your debts paid down as quickly as you can and this will help improve your credit.

While you can go to a subprime lender and get a loan after car repossession, you're going to pay a much higher cost in interest rates than you would have before. There may be extra fees associated with being granted the loan, too. You can improve your credit even after car repossession if you can open another line of credit and make the payments on time for several months. Pay all your current debts on time, as well. After six months, your credit rating should improve, but the longer you can wait, the better off you'll be. After one to two years, your score will be higher and you can get a car loan at a much more reasonable interest rate.

Contact the credit reporting agencies (Innovis, TransUnion, Equifax and Experian) and add a note to your report with each of them, explaining the circumstances of the repossession. You can only add a very short note, but at least your side of the story will be on the report when people check your credit. Some lenders might take that into consideration.

Look for a loan at a small car dealership. These dealerships are more likely to offer lower rate loans to people with bad credit, repossessions and even bankruptcies. Try a clearinghouse online where they shop your loan to several lenders.

And probably the easiest solution for getting a loan after a car repossession, especially if you can't wait a year or two for another vehicle, is to find a same-day car loan establishment. Few run credit checks, but instead look at your income before granting a loan. If you have proof of your income and proof that you have a bank account, and your income is deemed enough to cover the loan, then you can have a car loan by the next day. The interest rate on these guaranteed car loans, because of the risk to the lender, is extremely high. Make the payments on time and restore your credit, then refinance later with another lender at a lower rate. Just be sure you really can manage the payments before you get another loan to avoid a second car repossession.