Most people at some point in their life struggle with finances which can end up affecting your income, your credit and you lose your car, as bad as it is, there is hope. Getting a car loan after a repossession is possible. It may take some time, but with a few steps in the right direction, you can bounce back and get a vehicle loan after a repo. Here are five steps to getting a car loan after a repossession:
1) Check Your Credit Score
Before you apply for a car loan it’s important to check your credit score and get copies of your credit report. Your credit score not only influences the ability to get a loan but the interest rate of the loan. The lower the credit score, the greater the risk to the lender, and the higher the interest rate to the loan.
Having a vehicle repossessed will hurt your credit score. How badly? Sometimes it’s not as bad as you think. But you need to check it before you apply for your next loan. By law, once a year, you are allowed a free copy of your credit report from the credit bureaus: Experian, Equifax, and TransUnion. Order one each. Chances are the information from each bureau will vary. In fact, there’s a good chance that some of the information reported will be incorrect. You won’t know until you check. Once you receive the reports, go over the information line by line for accuracy. Report any errors to the credit bureau and challenge the information. In doing so, you will be in that much better position when you apply for your next car loan.
2) Take Steps to Improve Your Credit
Once your credit report has been corrected for errors, your credit score will inch up. However, other than errors, you should fix what you can. Bring past due balances current and settle any balances that may be in collections. Most importantly, from that point forward, pay all your bills on time. If you have active credit cards, work to pay them down, but avoid any further charges (unless absolutely necessary). Taking these steps to repair your credit will take time—several months before the reports show the progress you have made. It also takes discipline, diligence, and dedication.
3) Save For a Down Payment
Granted, your cash flow will be somewhat limited as you work to repair your credit, but saving money for a down payment is a very good idea. It may be time to consider a second job, part-time, or an occasional gig, to increase your cash flow. In either case, if you wish to secure a loan and get a good interest rate from the lender, saving for a down payment will help. It is a meaningful sign to the lender that you, the borrower, have your finances under control. It will also mean lower monthly payments and, because you will not be borrowing as much money, you will be able to pay off the loan faster.
4) Stay Within Your Budget
Essentially, if you are applying for a loan after your car has been repossessed, it’s important that you only borrow what you can afford. What you can afford means borrowing a realistic amount that fits your budget, i.e., your monthly income needs to exceed your monthly expenses. Your monthly car payment, car insurance payment, and fuel need to fit within that budget. Look to purchase a basic, reliable model to get you back and forth to work, run errands, or for visiting relatives and friends. Until you have bounced back from your credit issues, unemployment or underemployment, for example, be as economical as you can.
5) Finding the Right Buy Here, Pay Here Car Dealership
Drive Now AZ is a “buy here, pay here” dealership committed to helping any of its customers who may have hit a bump in the road with their credit. By providing a simple loan process, We can help borrowers to repair their credit. Interest rates begin as low as 9.9%, and Auto Action is prepared to finance near any credit situation whether good or bad. Every interest rate is determined by the borrower’s individual situation. Let one of our finance specialists find the right program for you or use our quick pre-qualification form.