Does a repo stop me from buying a car?
Does a repo stop me from buying a car?
If you have missed out on one or more auto loan payments, the lender may move to repossess your car. Most states allow creditors to take back your car if you default on your auto loan repayment. When a repossession happens, it can be a big setback to your life, and it can linger on your credit report for 7 years.
After a repossession, there are two issues you have to deal with. First, now that you no longer have the car, you must figure out how to get around to and from work before you get another car. Second, even after a repossession, you may still be liable to pay the outstanding balance on a car you no longer own.
How Repossession Affects Your Credit Score
When a repossession occurs, it is recorded on the credit report, and it can remain intact for up to 7 years from the date of default. Usually, your credit score can drop by 40 to 240 points, depending on your current credit score.
Here are some of the ways a repossession can hurt your credit score:
Late payment: If you missed several repayments on your auto loan, the lender will report this information to credit bureaus.
Default: If you have not made loan payments as agreed, the lender will consider that you have defaulted and report this status to credit bureaus.
Repossession: After a repossession, your credit report will include a record of the repossession.
Collection: If you still owe money to the lender after a repossession, the lender might hand over the debt to a collection agency. This activity will appear on your credit report.
Can You Buy a Car after Repossession?
Repossession does not mean that you won't get an auto loan again. While it is challenging to find a lender after a repo, some lenders are willing to provide auto loans to borrowers with bad credit. These loans offer an opportunity to repair your credit by making timely loan payments.
However, traditional banks and lenders may be unwilling to work with you if you have a history of defaults and repossessions. A repossession record on your credit report indicates that you have defaulted on loans before and, therefore, you are considered a high-risk borrower. If you do get approved by a traditional lender, you can expect to get less favorable terms on your auto loan.
Getting a Loan after Repossession
If the repossession has greatly affected your credit score, there is still a chance that you can get a new auto loan. Here are the options you have:
Get a Bad Credit Auto Loan
If your credit score has taken a hit, and you are on track to fix it, you may still qualify for a bad credit auto loan. You can use this loan to rebuild your credit score by making on-time payments as our primary lender approves nearly everyone. If you are looking for a bad credit auto loan, talk to us for a quote.
Buy a Car from a Buy Here Pay Here Dealer
If you need to get back on the road immediately after a repo, you should consider buying a car from a buy here, pay here dealer. These dealers have less stringent auto loan processes, and you may only need to provide your proof of income, driver’s license, and insurance to get approved. We are the only Buy Here Pay Here dealer in Prescott and aim to provide safe, reliable transportation to our community.
Get Financing after Repossession
We understand the setback a repossession can cause you. Dealing with the financial implications of repossession and figuring out your daily commute, especially when you need a car for your work. As a buy here pay here dealer, CarXpress Prescott can help you get back on the road quickly. Fill out our credit application, and we’ll find a great deal for you. Read the CarXpressAZ reviews here.
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