Car dealerships that accept repos and bad credit

April 21, 2022

There’s nothing stopping you from buying a vehicle with cash immediately after a repossession – but financing can be another story. Within one year after a repo, qualifying for an auto loan can be tough. Here’s an option you may have for buying a car right after a repossession.

How long until I can buy a car after a repo? Vehicle repossessions can hurt your credit score and make it hard to be eligible for an auto loan. Most traditional and subprime lenders don’t accept borrowers with a repossession that’s less than 12 months old. If you apply for an auto loan with a traditional lender a few months after the repo, unfortunately, you’re not likely to qualify.

If it’s been a year since the vehicle was repo’d and you need a car loan, then your credit score could be the stopping factor. Most traditional auto lenders such as banks and credit unions have high credit score requirements, and typically require borrowers to have a credit score over 670. There’s no hard and fast rule on what credit score you need across all lenders, but that’s a good rule of thumb.

If your credit score is poor now and it’s been less than a year since the repossession, a buy here pay here (BHPH) dealership may be what you need.

In-House Vehicle Financing

BHPH dealerships have in-house financing. As the name suggests, you apply for financing at the dealership and the dealer is the lender. These are typically independent dealers that are limited to selling used vehicles.

While used cars may be your only option, these dealers often skip over the credit check. Without a credit pull, your recent repossession doesn’t impact your eligibility. For many of these dealerships, your proof of income, down payment size, and proof of identity are the most important parts of your eligibility.

To get an auto loan through a BHPH dealer, you may need:

• A down payment, possibly up to 20% of the vehicle’s selling price
• Proof of income, typically computer-generated check stubs
• Proof of identity and/or valid driver’s license
• Proof of residency, proven with a recent utility bill in your name
• Working phone

If you’re able to qualify for a loan from a BHPH dealer, expect a higher than average interest rate. Since many of these dealerships skip pulling your credit, they tend to charge more for borrowing. Think of this as the trade-off for skipping the credit check.

To lessen your interest charges, we recommend putting a large down payment on the vehicle and choosing a short loan term to pay down the loan quickly. Most auto loans are simple interest, meaning the faster you pay off your car loan, the less interest accrues during the life of the loan.

Rebuilding After Vehicle Repossession

Subprime lenders often work with borrowers in tough credit circumstances, such as an old repossession. In some cases, a car repo may be considered situational bad credit if a financial hardship caused the repossession and you had good credit up to that event.

A good way to bounce back after a repo is by paying everything on time, all the time. Even bills that aren’t automatically reported could have the potential to be reported as missed payments, such as a missed electric bill or late insurance premium. Checking out credit reporting services such as Experian Boost may be worth your time, too, if you have multiple bills or services that you already pay on time each month. Getting those services reported on your credit reports can add more credit mix variety and add some positive payment history.

Does a car repossession remain on your credit report if you get the vehicle back?

Yes, it definitely does remain on your credit report for up to 10 years. Here’s a situation, a man had his vehicle repossessed and managed to get together the 8,000 dollars in 10 days that he owed.

Oddly, he discovered 4 years later that the repo was still on his credit report as if it was never satisfied. He was hoping that it would be taken off soon after he paid the balance in full, but to his surprise it wasn’t. Although he provided proof that he paid, it still didn’t matter.

So the bottom line is, no matter what try to avoid repossession on a vehicle. Do whatever it takes and remember to always pay your auto loan payments on time.

Auto Credit Express has helped thousands of people with bad credit buy cars and re-establish their car credit at the same time. If you have less than perfect credit, and need an auto loan, visit us at AutoCreditExpressVideo.com to find out how we can help.

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