Your vehicle was just repossessed. Now you’re wondering if you’ll be able to get financing again. You’ll be glad to know that the answer is often “yes”.

While it is true that a vehicle repossession will hurt your credit score, it also doesn’t mean that you won’t be able to get approval for another car loan.

Even with a vehicle repossession, you might still be able to get a bad credit auto loan.

There are some steps you can take that will not only get you started towards improving your FICO score, but also put you back in the driver’s seat again.

9 Tips on Getting Financing After a Repossession


Before you sink into despair, bemoaning the loss of your vehicle and wondering how you’ll ever be able to get approval, there are a few things you can do. Thankfully, many financial institutions and bad credit auto dealers are willing to work with consumers that have a less than perfect FICO score and this should give you some relief that the situation is not hopeless.

  1. Find out why the vehicle was repossessed.

Missed payments are the most common reasons for vehicle repossessions, but it’s not the only one. If you’ve made every payment on time, and your car was stilled towed away, it is important that you call the lender immediately. Some leasing agreements require that you carry a certain amount of insurance on the vehicle. Failure to do so can result in repossession.

  1. Ask if you can get the car back.

Banks, credit unions and even Buy Here Pay Here lots do not want to lose money on vehicle loans. This is good news for you, since they are often willing to work with their lenders. If you’ve lost your vehicle due to lack of insurance, it is easier to get it back. Usually, all that’s necessary if for you to show proof of insurance and pay a fee.

However, if the repossession is the result of missed payments getting it back will be a little more difficult.

In some scenarios, you will be required to repay the auto loan in full. There will also be repossession charges. BHPH dealerships will often reinstate the terms of the original loan, but the repossession often stays on your credit report. The new payments will also be reflected in your credit history, which can negate some of the damage a repossession can have on your score.

Before you start trying to get your vehicle back, there are a few questions you should think about.

  • Will you be able to afford the fees, fines and monthly payments, along with the cost of insurance?
  • Is public transportation or a car pool a viable option?
  • Are you already thinking about declaring bankruptcy?

If you aren’t sure if you’ll be able to keep up with the payments and vehicle maintenance, it might be better to consider taking advantage of public transportation until you are financially stable. Declaring bankruptcy, before the automobile is auctioned off, can help you keep the car and work out a new payment plan. The downside to this is that a bankruptcy can stay on your credit report for several years.

  1. Understand your rights.

A repo agent cannot damage your property when retrieving the vehicle. For example, if it is in a locked garage the structure cannot be damaged. You are also legally entitled to any personal property left in the vehicle. The lender cannot sell or keep it in an attempt to recoup some of the loan. This does not apply to any upgrades you may have installed on the vehicle. If you believe your rights have been violated in any way, your best course of action is to contact a consumer rights attorney.

  1. Find out if you still owe after the vehicle is sold.

You might be surprised to learn that you can still owe on an auto loan, even after the vehicle has been sold at auction. This is especially true, if it was new when purchased. A deficient balance occurs when the amount the vehicle was auctioned off does not cover the remaining due on the loan in full. Failure to pay off your loan can send it to a collection agency, and this black mark will stay on your credit report for seven years.

  1. Know your credit score.

When you’re ready to apply for financing for a vehicle, after a repossession, it is crucial that you know your credit score. Chances are it will be subprime, but you can still get approval for a bad credit car loan. Knowing your credit score ahead of time will prevent any unpleasant surprises. Just be prepared to pay higher interest rates on the loan.

  1. Start repairing your credit immediately.

The first step is to request a copy of your credit history. You are entitled to one free credit report from each of the three credit bureaus annually. Carefully look over your history to determine what areas you can fix. Pay off any outstanding balances that are in collections, and try to refrain from accumulating any additional debt. If you do find an error, file a dispute with the bureau that issue that report.

  1. Have a down payment.

Once there is a vehicle repossession on your credit report, you will probably be required to have a down payment for your next auto loan. This is usually standard for any vehicle loan approved for consumers with subpar credit. Not only will this dramatically improve your chances for approval, it might even help you get a loan with slightly lower interest rates.

  1. Get all your paperwork together ahead of time.

When you have your documents ready, potential lenders tend to look more favorably on you. This is true, regardless of your credit score. Some of the paperwork banks and BHPH lots often require include,

  • Valid driver’s license
  • Proof of insurance
  • Recent pay stub
  • Utility bill (in your name)
  • Federal tax return
  1. Don’t purchase a vehicle you can’t afford.

It is important to think realistically, especially after a vehicle repossession. You don’t want to lose another car due to an inability to make the monthly payments.

Remember to think small. All you really need is basic and reliable transportation.

Recovering From a Repossession is Possible


If you’re vehicle has been repossessed, it is possible to rebuild your credit and get approved for another car loan. You should expect to pay higher interest rates and have a down payment, but if you stay current with your new loan your credit will start to improve.

A vehicle repossession doesn’t have to mean that you’ll never be able to drive a new car, only that it will take some time and hard work before your credit is above subpar.