If you need to buy a car after repossession on your credit report, you are in the right spot. We are going to cover what steps you should take to help increase your chances of getting approved for a new car loan,
How Recent is the Repossession?
If you had a vehicle repossessed a few days or less than a month ago, the odds of being approved for a car loan are virtually nil.
It takes a few months for your existing car to go through the auction process and for your current lender to report the final outcome of the repossession on your credit report.
Once the repossession has hit your credit report, you should work out a settlement with the creditor to repay whatever is outstanding on the loan.
With the used car market at all-time highs, you may be able to either break even or actually come out ahead, but the negative item will still appear on your credit report.
Why was the Vehicle Repossessed?
Prospective lenders are going to wonder why you did not keep your commitment with the previous creditor.
Perhaps you suffered a financial loss due to Covid or a relationship breakdown; whatever the reason, having a prepared response, it shows you are aware of the issue and taking responsibility for it.
This does not guarantee the lenders are going to approve your loan, but it will give you a fighting chance.
Cleaning Up Your Finances
This is an ideal time to start cleaning up your finances, so you can make the most of your budget.
Without a budget, you have no way of knowing if you are bringing in enough money to service your current debts.
While most of us were not taught personal finance or budgeting in school, it is something that everyone can learn; it is pretty simple once you start doing it.
When you have the budget in place, whatever money is left over should go towards reducing the total amount of debt you are carrying.
When you reduce the total amount of debt you are carrying, it serves two purposes.
- The amount of interest you pay is directly reduced by the total amount of debt you have; simply put, the less you owe, the less interest you are paying to service that debt.
- Your credit utilization rate will improve your credit score; when your credit score improves, it helps reduce the costs to service any existing and future debts.
Where to Buy a Car After Repossession
Contrary to what the websites advertise online, most cannot get you approved for a car loan; they do not have the long-standing relationships that your local car dealership has with their lenders.
By working with a dealership in your community, they will be able to get you approved, no matter how difficult or impossible it may seem. You need to head over to your local dealership right away and review what car loan options are available.
For those of you who know that you have a challenging credit situation, please visit Dixie Auto Loans where we have a team of credit specialists ready to help you get approved for a car loan today!