Getting a Car Loan After A Repo

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


, - September 7, 2017

If you struggle to make car payments, you can be faced with the stress of a repossessed vehicle and a lowered credit score.

A repossession remains on your credit report for up to seven years, making it difficult to get approved for a car loan. You can get a loan after repossession, but subprime lenders may not approve a loan until a year has passed—and most people aren’t willing to wait that long.

Obviously, the best thing to do is avoid repossession before it happens. But, if your vehicle is reposessed, there are a few options to consider.

Redemption and Reinstatement

A lender may offer you the option of either redeeming or reinstating your loan, depending on which state you live in (this may also be spelled out in your loan contract). Both options can get you your car back, but require quick action.

Reinstating a loan requires the borrower to pay the lender any past due payment on top of any repossession fees before the vehicle is returned under the original loan terms.

Redeeming your vehicle is another option. To do this, the borrower must pay the remaining loan balance, plus repossession fees and any additional fees you owe.

Buy Back Your Car

Depending on your state of residence a creditor can resell a repossessed vehicle, although it's required to let you know where and when the auction will take place. Some auctions are public and some are private--you can only bid on your vehicle in the former.

Borrowers can buy back their car at auction if they can come up with the money, but they're still on the hook with the lender for the difference between what the car sells for and the balance owed on the loan contract (plus any repossession and auction fees).

Bottom Line

The most important thing to remember is to prevent repossession before it happens. Borrowers should work with their lender and discuss any options before it gets to repossession-- many lenders are willing to work with the struggling borrowers if they're upfront about their situation.

If you find yourself in a situation where your car has been repossessed and you need an auto loan, CarsDirect may be able to help. We work with one of the nation’s largest networks of special finance car dealers who have the lending resources available to work with people in many types of credit situations. Get started and fill out our free online auto loan request form today!

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.


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