Can I Qualify to Buy a Car After Repossession?

Don't think that it's impossible to buy a car after a repossession. True, the majority of car lenders will reject your application. But by looking in the right place, you can secure a car loan after a repossession and drive away with a new or used automobile.

Rebuild Credit After Repossession

If you're not in a hurry to buy a new or used car after a repossession, delay the buying process and take this opportunity to improve your low credit score. Credit issues, such as foreclosures, bankruptcies and repossessions, severely damage credit profiles and lower scores. A damaged profile triggers higher finance fees and credit rejections. Instead of jumping into a new vehicle loan, rebuild your credit by paying your remaining credit accounts on time. If your old auto lender auctioned off the repossessed car but there's a balance on the loan, make plans to pay off this balance.

Use a Co-signer

If you know someone with a good FICO credit rating, ask him if he would be willing to co-sign on your new or used auto loan. This is a way to get you into another vehicle after a repossession as your co-signer is using his good credit to assume joint ownership of your wheels. Be aware that the lender will seek payment from your co-signer if you cannot come up with the money.

Acquire an Auto Loan

Sub-prime auto lenders work with people who have repossessions on their record. Rather than find a car and then look for an auto loan, secure your financing before visiting dealerships. Online auto loan brokers provide the opportunity to shop for multiple loans at once and compare lenders' offers. You can view interest rates, monthly payments and other terms. Choose the best loan for you and then search for a car.

In-house Financing

Dealerships that provide in-house financing are another option because they also work with sub-prime borrowers and people with no prior credit history. These dealerships are often smaller and privately owned, and they advertise "buy here, pay here." Depending on the dealer, you can get a used auto loan with no money down or credit check. Unfortunately, sub-prime auto loans have higher finance fees and higher monthly payments. Check with the lender first to see if it reports to all three major credit bureaus. Regular updates to your credit file help repair your credit after a repossession.