Can You Buy a Car With a Repossession on Your Credit Reports?

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Contributing Writer

Bethany Hickey is a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. She is a content writer for Auto Credit Express, CarsDirect, and many other automotive blogs, as well as the Poetry Editor for UM-Flint’s writing magazine.


, Contributing Writer - April 21, 2021

Yes, you can get a car loan with a repossession on your credit reports. It gets easier to get an approval the older the repo is, but it’s still possible relatively soon afterward with the right lender.

Lenders to Consider After a Repo

Once your credit score falls below 660, it can be a struggle to find an auto loan approval unless you work with bad credit lenders. As a general rule, most traditional auto lenders aren’t likely to approve you for a car loan with a recent repossession on your credit reports.

With all that being said, you have two main options to consider for a bad credit auto loan after a vehicle repossession:

  • Subprime lenders, or bad credit lenders, are likely to only consider your auto loan application if the repossession is at least one year old. If it’s been less than 12 months since the repo, and it may be challenging for you to get an approval. They do, however, assist borrowers with all sorts of bad credit situations caused by things like repossession, bankruptcy, or just credit that’s seen better days. After it’s been a year since the car repo, a subprime lender could be your ticket to an auto loan even if your credit score hasn’t completely bounced back.
  • Buy here pay here (BHPH) dealerships, also called tote the note car lots, are unique in their lending process because they don’t rely on a third-party lender’s approval to get you into an auto loan. They do all the car selling and financing in-house, appropriately named in-house financing. A BHPH dealership may not check your credit at all which means your recent repo (whether it happened two days ago or two years ago) doesn’t matter in your auto loan eligibility.

Remember, traditional lenders typically reserve their car loans for borrowers with good credit. These lenders are usually credit unions, banks, captive lenders of some automakers, and some online lenders. They may be willing to consider you after the repossession is a year old, but this varies. The damage of default and/or subsequent repossession may hurt your credit score so much that it’s hard to meet a traditional auto lender’s credit score requirements as well.

However, subprime lenders and BHPH dealers don't rely as heavily on your credit score, making them the wise choice when you need a bad credit car loan.

Which Option Is for You?

There are a few things to keep in mind before you choose between a subprime lender and a BHPH dealer.

First, how old is your repossession? If it’s at least one year old, then a subprime lender may be a better choice. Because subprime lenders are signed up with both franchised and independent dealerships, you typically have both new and used vehicles to choose from based on your eligibility and income. Additionally, subprime lenders report their loans to the national credit bureaus which gives you the opportunity for credit repair. Your timely car loan payments can help you repair your credit after the damage of repossession.

If your repo happened less than 12 months ago and you need a vehicle right away, then going with a BHPH dealership could give you a higher chance of approval. These dealers only sell used vehicles, but if they don’t check your credit reports, then your recent repo doesn’t matter to them. However, when a lender doesn’t check your credit, it means that your on-time payments aren’t going to be reported either – so your credit doesn’t improve if you stay current on the loan.

In terms of credit repair, a subprime lender is usually a better choice. If improving your credit is a priority you can ask the lender about their reporting practices to see if your credit score is likely to benefit from the auto loan.

The Impact of a Repossession

Your credit reports reflect a repossession for up to seven years – but there’s good news. Over time, that repo has less of an impact on your credit score. And after seven years, it’s not on your credit reports at all.

Most negative marks on your credit reports fall off after seven years, too. So missed or late payments that you may have had that lead up to the repo fall off as well. And if you take on new credit you can comfortably afford that’s reported, you can improve your credit for the better.

Let’s Get You Back on the Road

At CarsDirect, we know how tough it can be to find auto lenders that can accommodate bad credit situations, like a past vehicle repossession. Instead of driving all over town to look for one, let us do that legwork for you.

Over the last two decades, we’ve gathered a network of dealerships that assist bad credit borrowers – and our connections are all over the country. To get matched to a dealer in your local area and start the search for your next car loan, fill out our three-minute auto loan request form.

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, Contributing Writer

Bethany Hickey is a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. She is a content writer for Auto Credit Express, CarsDirect, and many other automotive blogs, as well as the Poetry Editor for UM-Flint’s writing magazine.


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