Having a repossession reported on your credit history doesn't necessarily mean you can't obtain another auto loan from a traditional lender, especially if years have passed since your repossession and you've re-established your credit rating. Consider viewing your own credit to decide where to apply for your loan and whether a down payment or cosigner might help to obtain an approval.
Review Your Own Credit
To determine if your credit has improved since your repossession, review your credit report to check your positive and negative credit history. Obtain a copy of your credit report to find out your credit standing. The Annual Credit Report website offers a free annual credit report from each of the main bureaus. Review your current accounts. If years have passed since the instance and your current credit is up to date, meaning all accounts are paid on time and you've re-established your rating, you may apply for traditional financing. Correct any inaccurate account information before applying for a loan to improve your chances for a loan approval.
Where to Apply
Apply to a local credit union or bank, such as one you have an account with, to determine if you need to pursue other lending options. A reported repossession still reported on your credit report is likely to raise your approved interest rate, so don't shop on interest rate alone. Search for a bank or credit union with a good reputation or that offers other loan incentives, such as free checking or a rate decrease for automatic payments. Call the lender to submit for a loan preapproval. You may receive a counter offer from a lender, such as a down payment requirement, price or term restriction.
Subprime Lenders
Subprime lenders offer loans to borrowers with poor credit. Interest rates are higher than you can obtain using a traditional lender. Subprime lenders don't automatically approve everyone for a loan, but if you find that you can't obtain lending elsewhere, apply to one of these lenders instead. Subprime lenders often require a large down payment and restrict loan terms, which can affect your vehicle choices if you plan to stick to a budget. Subprime lenders are located in most areas. Also, apply for a preapproval if you plan to use a subprime lender so that you can secure the terms of your auto loan before shopping.
Considerations and Alternative Options
Potential lenders look at various pieces of information aside from a reported repossession. If you paid your previous lender for its loss from the repossession, you'll have a better chance of obtaining an auto loan than someone who did not. A stable income, employment and address history also is favored by lenders. You may also apply for financing using a cosigner. A cosigner secures your auto loan with his credit and income information. Providing a large down payment may also help you to obtain an auto loan. If you can provide a large down payment, you'll create equity in your vehicle, which limits lender risk.
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