Does a Repossession Affect My Ability to Get Another Car Loan?

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


, - February 25, 2020

A repossession can impact your ability to get another car loan in the future. While it may not be impossible to get an auto loan after a repo, it can be more difficult due to it being listed on your credit reports and the drop in your credit score after your vehicle is repossessed.

Repossession Decreases Your Credit Score

When your car is taken by a recovery company at the request of your lender, it’s typically due to a default. Default means you’re not making payments, and as the lienholder, the lender has a right to repossess your vehicle. Once this happens, your credit score is negatively impacted.

Not everyone's credit score is impacted the same by a repossession. Usually, if you have poor credit, it may not drop as many points because it was low to begin with. As a general rule, the better your credit score is to begin with, the further it has to drop. Your credit score could fall anywhere from 60 to 240 points due to a repossession. Typically, after defaulting on an auto loan, you need a subprime lender in order to qualify for another one.

Subprime lenders work with people in difficult credit situations such as repossession, and rely on more than just your credit score to help you qualify. Because they depend on additional factors, there are requirements you have to meet for a car loan approval.

Getting a Car with a Repo on Your Credit

Most lenders recommend waiting at least one year after a repo before applying again. If you meet all the lending qualifications, a subprime auto loan can be a great way to begin rebuilding your credit after a repossession. However, if you can't wait, you may not be out of options just yet.

A subprime lender should be your go-to option for a bad credit car loan (no matter the reason you need one). In some cases, a subprime auto loan can be tough to get due to the number of qualifications that you have to meet. If you're missing just one of the lender's requirements, you won't be considered for a loan.

If you're unable to get a subprime car loan, you can apply for a loan through a buy here pay here (BHPH) dealership. These dealers don't always check your credit, and even if they do, it usually won’t affect your ability to get the vehicle you need. BHPH dealerships are also lenders, and they rely more on your ability to make the payments and provide a down payment than they do on other factors.

Be aware, though, that since many of these dealers don't check your credit, they also may not report your timely payments. This means you can't always increase your credit score with an auto loan through a BHPH dealership.

The Bottom Line

Even though your credit is negatively impacted by having a repossession on your credit reports, it doesn't make it impossible to get a car in the future. As long as you're working with the right lender, you should have an easier time with a post-repo auto loan.

If you're ready to begin looking for your next car loan, let us help. At CarsDirect, we have many options available to help you with the process. You can search for your next vehicle with the help of our new and used car sections, or simply start the process of finding a dealership to work with.

Once you fill out our auto loan request form, we'll save you the stress of searching by connecting you to a dealer in your area from our nationwide network of special finance dealerships. What are you waiting for? Get started right now!

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


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