How to Buy a Car After a Repo

Auto lenders commonly repossess vehicles when owners stop making their loan payments. Repossessions can follow a job loss, and having the bank reclaim your automobile can hurt your credit score. Losing your car can stop immediate loan approvals. But within time, you can improve your bad credit score and buy another car after a repo.

Instructions

1

Negotiate with your lender. Lenders will report the repossession, and this notation will reduce your score. Lenders may also report any deficiency balance after re-selling your car (the difference between what you owed and what the car sold for). Make arrangements to pay off this balance to lessen your credit damage after a repossession.

2

Give yourself enough time to rebuild your credit score. Don't apply for another used or new car loan immediately after the repossession. This results in a much higher interest rate. Allow yourself time to improve your credit score -- perhaps six months or longer. Pay down existing debts and maintain a good payment history with other loans and credit card companies.

3

Provide an explanation on your personal report. If you lost the vehicle because of a layoff or illness, include a brief statement on your credit report next to the negative item.

4

Shop around and compare auto loans. Some lenders don't issue loans to people with a recent repossession. Check with local subprime auto lenders and acquire loan quotes. Use a co-signer if needed to help you qualify for another car loan. Ask a relative or friend with a good credit rating to help you obtain a lower rate.