Getting a car loan after repossession isn’t easy, but it can be done. The keys are waiting as long as possible before applying for auto financing and working with the right lender.

Wait until Credit Damage Lessens

It takes time to repair the damage done to your credit after a repo. The good news is that the negative impact lessens over time. The bad news is that the repossession will show up on your credit report for up to seven years. So, if possible, it’s best to wait at least one year after repossession to try and apply for a car loan, but the longer you wait, the better. Typically, the only exception to the one-year wait time is if your repo was included in a bankruptcy.

Build Your Credit while You’re Waiting

To improve your chances of getting financed after a repo, it’s a good idea to begin working on your credit. When you regularly monitor your credit, you’ll know what the lenders see and there won’t be any surprises when you apply for a loan.

You can monitor your credit throughout the year by getting a credit report from each of the three national credit bureaus – Experian, TransUnion, and Equifax – once every 12 months. You’re entitled to get these for free by visiting Check your reports for accuracy and dispute any mistakes or unrecognized credit to the reporting bureau. Correcting mistakes on your reports could help raise your credit score.

Beyond that, there are two strategies that can most effectively help you rebuild your credit. Begin paying all your bills on time and in full to help build a positive payment history. Make sure you keep your credit cards, but keep your credit utilization low. To find your credit utilization ratio, simply divide your credit card balances by your credit limits. Lenders like to see credit utilization at 30 percent or less. Responsibly managing revolving credit can help raise your credit score.

Save Up a Down Payment

How to Get a Car Loan after RepossessionIt’s also a good idea to begin saving for a down payment on your next vehicle. When you’re working with a subprime lender, which you’ll typically need to do after a repo, a down payment will almost always be required.

Typically, subprime lenders will ask for a down payment of $1,000 or 10 percent of the vehicle’s selling price, whichever is less. Only a lender can tell you what your required down payment will be, but putting down at least 20 percent of the car’s selling price will help you get approved, save even more money in interest charges, and may even allow you to shorten term of your loan.

Find the Right Lender

If you can’t wait a year after a repossession to get another vehicle, you’ll want to try for in-house financing. Getting a car loan from a buy here pay here (BHPH) lot is usually easier because these lenders don’t tend to rely on credit scores for approval, and instead focus on income. Just know that vehicles from a BHPH dealer will be older model used cars with higher mileage that come with high interest rates. Typically, you’ll also be required to make your payments on a weekly or bi-weekly schedule, often in person at the dealership.

If waiting to get a vehicle won’t cause problems, you should – just know that you’ll need to find a subprime lender when the time comes to get a car. Subprime lenders only work through special finance dealers, and not all dealers are signed up with them. This can sometimes make it difficult to get financing if you have bad credit or a repossession. Fortunately, Drivers Lane can help if you don’t know where to start.

Let Us Show You the Way

Here at Drivers Lane, we work with a nationwide network of special finance dealers that have the subprime lending resources available to help people who are struggling with credit challenges. We want to help you get the process of finding the right lender started with ease. All it takes is a few minutes to fill out our simple auto loan request form, and we’ll get to work on finding a local dealer in your area at no cost to you. Don’t delay – take the first step now!