A repossession is a major blow to your credit report, but you can bounce back and move forward. If you have had a car repossessed, you can buy another car, although you may need to be more creative in how you do it. Take your time and find the right deal on the best car for you.
Banks or Credit Unions
First check with your own bank or credit union, preferably the branch where you normally do business and the employees know you. Smaller, regional banks or credit unions want to build relationships with their customers and may look at your present history with their institution as a future indicator of your ability to pay. You can expect to pay higher interest rates for the loan. If the repossession is recent, within the last year to two years, you may not be able to finance by this route.
New Car Dealers
Most new car dealers have aggressive finance departments which are used to working with difficult credit situations. They may have a few high-risk lenders who will buy your loan from them. Expect to pay 20 percent interest, or higher, and be prepared to make a 10 to 20 percent down payment. It is also beneficial to demonstrate that your financial problems are in the past. You may not be able to purchase the exact car that you want, but a dealership may be able to help you get into a car for reliable transportation.
Buy-Here-Pay-Here Lots
Most communities have at least one lot that specializes in buy-here-pay-here financing. These dealers offer lower priced vehicles for a small down payment and weekly payments. You may have minimal choice in vehicles and some of the quality may be questionable, but they will get you into a drivable vehicle. Some of these dealers are not reputable, so keep track of your payments and balances carefully. Most of these dealers are quick to repossess if you miss a payment, with some even using electronic disabling devices to stop you from driving the car if you miss a payment.
Pay Cash
Paying cash is a good option since you have already been in trouble with a car loan once. Use a household budget to make money available to save toward the purchase of a reliable car. Consider taking on a second job or some extra work to put your saving's plan into high gear. In six months or less, you should be able to save to purchase a vehicle. Once you complete this purchase, start saving immediately for your next vehicle. Over time, you will be driving nice cars that you own so you never risk repossession again.
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