Having your car repossessed can be devastating for many reasons, one of the biggest concerns is not just losing your vehicle but the impact it will have on their credit score. It’s not surprising to hear that having a repossession on your credit report can make your score go down significantly. However, repossession does not mean that you can’t get approved for an auto loan in the future. Many people simply can’t go about their daily lives without a car, especially in San Diego, and if your vehicle has been repossessed, you can still seek out another auto loan. Here’s everything you need to know about moving forward after a repossession.
Two Kinds of Repossessions
One key thing to understand about repossessions is that there are actually two different types. The bank may have had to come and forcibly retrieve their collateral, or you may have voluntarily surrendered it. If you have an involuntary repossession, lenders may be hesitant to work with you at first since it looks like you were resistant with your original lender. However, if you have a voluntary repossession, your chances are a little better. Voluntary repossessions imply that you are willing to work with the lender and continue paying some of what you owe.
Still, no matter which type of repossession you have, a future auto loan is possible. No two repossession situations are the same, and many lenders are willing to work with you to understand your circumstances.
Can I Get a Repo Removed from My Report?
Repossessions can remain on your credit report for up to seven years, and it’s typically difficult to get an auto loan within the first year after the repossession. FA Financing has several ways around this though! Additionally, there are ways to have your repossession removed from your credit report thus helping you to move forward and back on the road.
First, it might be possible to negotiate your debt with your lender. Lenders usually look at repossessions on a case-by-case basis, and you might be able to settle your debt for less than what you originally owed. This strategy, called a “short-pay” can help you pay your debt back more quickly and, in turn, have your repo removed from your credit report.
You may also file a dispute if you’ve noticed that something about your repossession has been inaccurately reported to the credit bureaus. This method takes some time and a bit of investigation from the credit bureaus, but if your auto lender has made a mistake, your repossession will likely be removed from your record. However, if you’re thinking about filing a dispute, you’ll need to act fast, since the window to file after a repossession is usually quite short.
How to Get Another Car Loan After a Repo
Many customers are told that, in order to get a car loan after a repossession, they have to build up their credit first. While this approach works for some people, it’s definitely not a hard-and-fast rule. Even if you have poor credit, you can still get qualified for another car loan, and you can even use that auto financing to help rebuild your credit.
First and foremost, it’s vital to make sure that you are no longer in possession of the vehicle. If the bank can’t get their collateral back, they won’t report the situation as repossession and will instead keep the account open. Then, this account is left as delinquent on your report, which can make it virtually impossible to get auto financing.
Even if your credit isn’t strong, there are other things you can do to improve your chances of getting approved for an auto loan. To start, save up for as large of a down payment as you can afford. The larger your down payment is, the easier it will be to convince auto lenders that you are serious about your purchase. Typically, if you’ve had one or two repossessions, you’ll want a down payment of at least 15% to 20% of the vehicles sales’ price. If you’ve had three or more repossessions, you’ll likely need to put down at least 40% to 50% and may also need a cosigner on your new loan.
When an auto lender is reviewing your application and sees a repossession, they are likely to look for other avenues of stability. One of the best ways to prove stability is continuous employment at the same company. Typically, lenders will want you to have worked with the same employer for at least six months. If you’ve stayed in the same industry for six months or more, it may be possible to have two different employers within that time period.
Working with FA Financing
When you’re trying to get an auto loan after a repossession, it can be difficult to get approved on your own. However, working with an auto lending expert like FA Financing can help position you in the right light to get approved, no matter what your credit score is or how many repossessions you’ve had.
The team at FA Financing has spent more than 20 years working with car buyers dealing with all kinds of financial circumstances, including multiple repossessions, bankruptcy, trouble proving income, and more. Even if you are considered a subprime candidate for a loan, we can work with lenders to highlight the strengths of your application and help you get approved for a loan with fair terms. We’ll work directly with you to understand why your car was repossessed, then we can offer tips and strategies to prevent a future repo. When we speak to potential lenders, we’ll illustrate your situation and explain why you’re a good candidate for a loan regardless of the repossession.
FA Financing makes it easy to get started working toward a new auto loan. Simply fill out our pre-approval application to get a free quote, submit the necessary documents, and pick a handful of vehicles you might like. Then, we’ll work with lenders to secure the financing you need for your new ride. To learn more about finding a suitable auto loan for your next vehicle, contact FA Financing today!
