Vehicle repossession on your record can make it difficult to get financing for the purchase of a new car. Many lenders consider applicants who have had a previous car repossessed extremely high risk and choose not to extend approval on a new loan. There are a few steps to take and things to consider that will help you get auto financing after repossession.
Repay the Debt
One of the most important things you need to do after repossession is repaying the debt owed. Make arrangements with the lender or collection agency to repay any remaining balance connected to the car repossession. When you allow the debt to remain on your credit report without an effort made toward repayment you are compounding the already negative impact of the repossession.
Check Your Credit
Another way to improve your chances of getting auto financing after repossession is taking care of any other negative marks on your credit report. Improving your credit score overall can help to counteract the impact of the financing issues that preempted your car being repossessed.
While retrieving your credit reports from the various agencies, you should also take time to add a note to each explaining any special circumstances which contributed to the repossession. Some lenders, especially those experienced with assisting people with credit worthiness problems, may take this note into consideration when deciding whether or not to approve your auto financing.
Allow Time to Pass
Wait as long as you can after repossession before attempting to get new auto financing. By allowing time to pass, you give yourself more opportunities to improve your credit rating. Unless you have an immediate need for a car and have no way of getting one without financing, take as much time as possible. Open an easy to get line of credit and make regular payments while you wait, this will slowly improve your credit score.
Dealership Financing
An option for faster financing after your car is repossessed is a car dealership that specializes in providing financing packages to those with troubled credit. The average interest rate available with in-house dealership financing is higher than what can be expected with outside lenders that have stricter credit requirements. However, if you are in need of a car and cannot afford to buy a worthwhile model without a loan, dealership financing is most likely your best option.
A repossession on your record can make auto financing difficult to get. However, given time and careful credit building habits, you can improve your chances of financing approval.
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