Car purchase after a repossession can almost be impossible. But can you get a car loan with a repossession report on my credit history? If yes, how possible can it be?
These are question people ask to be sure, but this article provides the answer you are seeking for. There’s nothing stopping you from buying a vehicle or a house with cash immediately after a repossession – but financing can be another story.
Within one year after a repo, qualifying for an auto loan can be tough. Here’s an option you may have for buying a car right after a repossession.
How Long Do I Have to Wait for a Car Purchase After Repossession?
Repossessions can damage your credit and make it difficult to qualify for an car loan. Most lenders, both traditional and subprime, typically don’t accept borrowers with repossession within the past 12 months. Even if a few months have passed since the repossession, it’s unlikely that you’ll qualify for a car loan with a traditional lender.
If it has been a year since the repossession and you require a car loan, your credit score could be the deciding factor. Traditional lenders, such as banks and credit unions, often have high credit score requirements, usually over 670. While the credit score requirement can vary among lenders, this serves as a general guideline.
If your credit score is currently low and less than a year has passed since the repossession, a buy here pay here (BHPH) dealership may be a suitable option for you.
Helpful Guides
- Rebuild Your Credit Score After Repossession for Missing Payments
- What is the Duration of Car Repossession on Your Credit Report?
- Why does Car Repossession Stays 7 Years on Your Credit Report?
- What are the 5 Factors That Affect Your Credit Score? FICO Score
- The Importance of Regularly Checking Your Credit Report
In-House Vehicle Financing
BHPH dealerships have in-house financing. As the name suggests, you apply for financing at the dealership and the dealer is the lender. These are typically independent dealers that are limited to selling used vehicles.
While used cars may be your only option, these dealers sometimes You might want to consider a buy here pay here dealership for a car loan without undergoing a credit check. Without a credit pull, your recent repossession doesn’t impact your eligibility. For many of these dealerships, your proof of income, down payment size, and proof of identity are the most important parts of your eligibility.
To get an auto loan through a BHPH dealer, you may need following:
- A down payment, possibly up to 20% of the vehicle’s selling price
- Proof of income, typically computer-generated check stubs
- Proof of identity and/or valid driver’s license
- Your residency prove, with a recent utility bill in your name
- Active phone
If you’re able to qualify for a loan from a BHPH dealer, expect a higher than average interest rate. Since many of these dealerships skip pulling your credit, they tend to charge more for borrowing. Think of this as the trade-off for skipping the credit check.
To lessen your interest charges, we recommend putting a large down payment on the vehicle and choosing a short loan term to pay down the loan quickly. Most auto loans are simple interest, meaning the faster you pay off your car loan, the less interest accrues during the life of the loan.
Rebuilding After Vehicle Repossession
Vehicle repossessions can stay on your credit reports for up to seven years, but their impact lessens over time. After 12 months, some lenders may consider working with you if you can demonstrate your ability to repay a loan and maintain a good credit score.
Subprime lenders specialize in assisting borrowers with challenging credit situations, including past repossessions. If the repossession was due to a financial hardship and your credit history was otherwise good, it may be viewed as a temporary setback.
To recover from a repossession, it’s crucial to make all payments on time consistently. Even non-reported bills like utility or insurance payments could affect your credit if they are missed.
Exploring credit reporting services like Experian, Eqiufax or TransUnion can help by including additional on-time payments in your credit reports, diversifying your credit mix, and establishing positive payment history.
Car Purchase After a Repossession is possible but you have to follow the right steps. Lastly, if you want to know if you can get another car loan after a voluntary repossession then you have to read from our previous articles.
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