Finding Car Dealerships that Accept Bad Credit and Repos

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Even with poor credit.


Contributing Writer

David Topham covers the automotive and auto finance industries as the Content Manager of Auto Credit Express who also contributes to CarsDirect. He was born and raised in Michigan and is a graduate of Michigan State University.

, Contributing Writer - September 11, 2018

It's not impossible for people with bad credit that have been through a repossession to qualify for another car loan. There are lenders that can help you get financing after repossession, but they typically are only available through car dealerships that work with bad credit buyers.

Car Dealerships that Work with Repossessions

All dealerships work with borrowers with good credit, but few are equipped to handle unique situations such as a buyer with a past repossession. This is because most lenders only loan to borrowers with good to excellent credit.

If you need a car dealership that works with bad credit and repos, you need to find a special finance dealership. These dealers are signed up with subprime lenders that specialize in helping borrowers who are dealing with challenging credit situations. Subprime lenders are typically only available through the finance departments of special finance dealerships because they're indirect lenders, meaning you can't apply directly with them.

While there are no universal requirements, subprime lenders usually have two rules when it comes to getting a car loan after repossession:

  • Any repo has to be at least one year old unless it was included in a bankruptcy.
  • A buyer can't have multiple repossessions showing on their credit reports unless all were included in a bankruptcy.

So, the first thing you have to do if you need a car after repossession is to make sure a year has passed. Because a repo lowers your credit score, it's a good idea to use this time to improve your credit, budget for a vehicle, save for a down payment, and gather the necessary documents needed to get financed.

Having a repossession on your credit reports prevents you from being able to qualify for the best financing deals. But think of it this way: getting a bad credit car loan allows you to get the vehicle you need and a chance to improve your credit, as long as you make all of your payments on time.

But if you find that your credit is keeping you from getting approved at a special finance dealership, there's one other option you can look into.

Buy Here Pay Here Dealerships

Another way to get financed with bad credit and a repossession is a buy here pay here (BHPH) car lot. These types of dealerships sell vehicles and provide the financing instead of using outside lenders.

Because BHPH dealers finance loans in house, they typically don't check the credit of applicants. So, it won't even matter if you have a repossession showing on your credit reports.

The main advantage to getting a car from an in-house financing dealership is that it's easy to get approved as long as you have a qualifying income. However, there are a few drawbacks to this type of financing:

  • These dealers only carry used cars because they aren't affiliated with any franchise or manufacturer. You should look closely at any vehicles you're considering and get a vehicle history report, too.
  • Interest rates tend to be higher on average. According to Experian, the average interest rate for subprime borrowers on all used car loans was 16.72 percent in the second quarter of 2018. But for used car loans from independent dealerships like BHPH dealers, the average interest rate was 18.21 percent during that same period.
  • Payments may need to be made in person at the dealership. As their name suggests, most BHPH dealerships require you to pay in person. Additionally, they may establish a weekly or bi-weekly payment schedule instead of paying once a month. This can prove to be inconvenient.
  • Your loan may not help you improve your credit. While more common now, many of these dealers don't report your loan or payments to the credit bureaus. This means your on-time payments won't help you improve your credit or raise your credit score.

Finding Bad Credit Repo Car Dealerships Near You

A repossession knocks down your credit score and stays on your credit reports for up to seven years, but that doesn't mean you can't get an auto loan during that time. Getting a car loan after repossession is possible through a special finance or buy here pay here dealership.

Here at CarsDirect, we can help you find a car dealership that works with bad credit and repos. Our nationwide network of dealers know how to handle challenging credit situations. We can take the hassle out of finding one of these dealers near you. All you have to do to get the process started is complete our auto loan request form. It's free of cost and obligation, so you can start with confidence right now.

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, Contributing Writer

David Topham covers the automotive and auto finance industries as the Content Manager of Auto Credit Express who also contributes to CarsDirect. He was born and raised in Michigan and is a graduate of Michigan State University.

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