How to Buy a Car After a Repo
- 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.
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