Writer: Aaron Crowe
Editor: Lillian Guevara-Castro
Reviewer: Ashley Fricker
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Key Takeaways
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After a repossession, auto lenders will see you as a risky borrower until you improve your financial profile.
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Repossessions can stay on your credit report for seven years and negatively impact your score during that time.
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Refinancing your auto loan could be an option if you face repossession, but it may not give you much breathing room.
Finding auto loans after repossession can sound like an impossible task. If you’ve missed your car payment so often that your car has been repossessed, it can be hard to imagine who would want to loan you money for another car.
Plenty of lenders, it turns out.
Auto lending networks specialize in helping people with bad credit, no credit, bankruptcy, and repossession find loans from a variety of lenders. You may be able to find loans for new and used cars and even refinancing after the network gives you a list of lenders with offers for you to choose from.
Best Auto Loans After Repossession
Vehicle repossession can be a sign of having bad credit. A car dealer may want your business, but many lenders may be leery of financing another car if you’ve gone through the repossession process at least once.
The auto lending networks we recommend below are easy to use and you can often get an online quote within minutes. You can also get the money within 24 hours, allowing you to buy a car quickly and get on with your life.
- Network of dealer partners has closed $1 billion in bad credit auto loans
- Specializes in bad credit, no credit, bankruptcy and repossession
- In business since 1999
- Easy, 30-second pre-qualification form
- Bad credit applicants must have $1500/month income to qualify
- See application, terms, and details.
| Interest Rate | In Business Since | Application Length | Reputation Score |
|---|---|---|---|
| 3.99% - 29.99% | 1999 | 3 minutes | 9.5/10 |
2. LendingTree
- Auto loans for purchase, refinance, and lease buyouts
- Nationwide lender network
- Get matched with up to 5 lenders that fit your financial profile
- It only takes a few minutes and is free with no obligation
- See application, terms, and details.
| Interest Rate | In Business Since | Application Length | Reputation Score |
|---|---|---|---|
| Varies | 1998 | 4 minutes | 9.5/10 |
- Free, no-obligation application
- Specializes in auto loans for bankruptcy, bad credit, first-time buyer, and subprime
- Affordable payments and no application fees
- Connects thousands of car buyers with auto financing daily
- See application, terms, and details.
| Interest Rate | In Business Since | Application Length | Reputation Score |
|---|---|---|---|
| Varies | 1994 | 3 minutes | 9.0/10 |
4. RefiJet
- RefiJet helps people lower their monthly auto payment
- Pre-qualifying for a refinance auto loan does not impact your credit score
- Nationwide network of lenders
- Presents you with options from lenders that fit your situation
- See application, terms, and details.
| Interest Rate | In Business Since | Application Length | Reputation Score |
|---|---|---|---|
| Varies | 2016 | 5 minutes | 8.0/10 |
- Loans for new, used, and refinancing
- Queries a national network of lenders
- Bad credit OK
- Get up to 4 offers in minutes
- Receive online loan certificate or check within 24 hours
- See application, terms, and details.
| Interest Rate | In Business Since | Application Length | Reputation Score |
|---|---|---|---|
| Varies | 2003 | 2 minutes | 8.5/10 |
These companies offer a wealth of information on their websites to make securing a vehicle loan simpler. You’ll find resources like payment calculators, interest rate estimators, and the latest interest rates for various auto financing options.
After filling out a short and secure offer form, users can be matched with multiple offers from various lenders, including banks and dealers, in just a few minutes. After choosing an offer, you can proceed to their website to finish the application and determine the next steps for buying the car you want or refinancing your current loan.
How Soon Can I Get a Car Loan After a Repossession?
Even if you’ve saved up enough to replace a repossessed car, maybe with help from a subprime lender, you might still need to exercise patience before you’re approved for a new loan.
Going through the repossession process will damage your credit rating for at least seven years.
That doesn’t mean you have to wait seven years to buy another car. You can obtain a bad credit auto loan after repossession, though some lenders may require you to wait a year before they’ll consider your loan application.
Here’s a look at the maximum amount of time some items can stay on your credit report, including derogatory marks such as repossession:
| Item Type | Time on Credit Report |
|---|---|
| Soft Credit Report Inquiry | No Report Impact |
| Hard Credit Report Inquiry | 2 Years |
| Delinquent Payment (30+ Days) | 7 Years |
| Vehicle Repossession | 7 Years |
| Defaulted Account | 7 Years |
| Foreclosure | 7 Years |
| Bankruptcy Discharge | 7-10 Years |
The bad credit car loan specialists we’ve recommended stipulate on their websites that they’re willing to work with borrowers who’ve gone through an auto repossession. Most bad credit car loan sites stipulate they can reach a decision within 24 hours.
Applying for a loan is a breeze, taking just a few minutes. You can easily reach out to multiple companies to check your eligibility, and soon head to a car dealership to make your purchase. Lenders typically respond within a day, or even a few hours, so you’ll quickly know when you might secure a loan after a repossession.
What Happens to a Car Loan After a Repossession?
Even after your car is repossessed, your payment troubles don’t just disappear. Whether the repossession was voluntary or not, you’re still on the hook for the remaining amount on your auto loan.
After the lender gets the car, it will resell it to recoup what you owe. If that isn’t enough money to pay off the balance, then you’ll owe a deficiency balance that will be reported to the credit bureau and listed on your credit report and will hurt your credit score. And, don’t forget, you’ll still owe that balance.
For example, if your loan balance is $7,000 and your repossessed car sells for $5,000, then you still owe the lender $2,000. If, however, more money is collected from the sale than what you owe, then you must be paid the surplus funds.
Here is an example of a vehicle reposession deficiency balance:
| Aspect | Amount |
|---|---|
| Outstanding Loan | $17,500 |
| Various Repossession Fees | $400 |
| Sale Price at Auction | $13,000 |
| What You Owe (Deficiency Balance) | $4,900 |
The sale price of your car at auction may not cover the balance you owe the lender. If that’s the case, the lender may ask a court to enter a deficiency judgment against you so that the lender can try to collect the remaining balance on the loan.
Repossession expenses are also likely and will be added to your deficiency balance. This can include the cost of sending a repossession agent, storing the car, and preparing it for sale.
Some states have laws allowing consumers who have lost their car in an auto repossession to reinstate their loan, according to the Federal Trade Commission. You can reclaim your car by paying the amount you’re behind on the loan along with your creditor’s repossession expenses.
Once you get your car back, you’ll want to avoid another repossession by making payments on time and following the reinstated contract.
Can You Refinance a Car Loan After Repossession?
If you can’t afford to make a car loan payment, then refinancing a loan may make it more affordable in the short term — while more expensive in the long run. But refinancing after a repossession is incredibly difficult.
As Auto Credit Express points out, refinancing a loan or making any payment adjustment requests should be done before a repossession. If you’ve built up equity in your car, then you’ve probably made on-time payments, and you may have just hit a rough financial stretch that you could overcome.
Some lenders may extend the loan a few months to help you make payments or refinance your loan with a lower monthly payment by lengthening the loan term.
Once your car is repossessed, your auto lender may offer two options to get your car back, neither of which involve refinancing a loan:
- Reinstating your vehicle loan if you make all back payments plus all costs of the repossession.
- Sell you back your car, called redemption, if you pay the entire balance due on the loan plus interest, fees, and any repossession costs.
Most states require lenders to tell borrowers when their car will go to auction, so you’ll have a chance to buy it for cash. But even then, you’ll still be required to pay the lender the difference between what your car sells for at auction and the balance owed on your loan.
Is a Voluntary Surrender Better than a Repossession?
A voluntary surrender occurs when you decide to give up your car because the lender has asked for it, or you anticipate they will. This choice can make the process smoother for everyone involved.
This can reduce your creditor’s expenses, which you’d be responsible for paying after the repossession. As far as the debt you owe, a voluntary surrender is cheaper than a repossession that’s done without your assistance.
A voluntary surrender may save you the repossession fees your lender would have added to your debt.
Late payments and repossession will appear on your credit report, reducing your credit score. Before it gets to that point, it’s smart to reach out to your lender about your debt as soon as you know you’ll miss a payment. Most lenders are willing to work with you if they think you’ll catch up soon, even if it’s a bit delayed.
You may be able to negotiate a delay in payment or a revised schedule of payments. Setting up automatic payments for your auto loan can make it easier to get a short delay approved. If a new agreement changes the original contract, get it in writing.
Can I Get a Car Loan from a Credit Union?
Credit unions are renowned for their low loan rates and minimal fees. If you’re part of a credit union, it’s definitely worth checking to see if you qualify for a loan after experiencing a repossession.
On the flip side, credit unions typically avoid taking on high-risk loans compared to other lenders. This caution is because they need to wisely manage their members’ deposits and savings. To qualify for a car loan from a credit union, you might need to demonstrate strong creditworthiness.
Still, credit unions can be more lenient with first-time borrowers or with people who have poor credit. Their main purpose is to serve the needs of their members, and that can include people with bad credit who need to shop at a car dealer. Having poor credit can lead to a higher rate than if you have good or excellent credit.
Here is a look at the average auto loan interest rates by credit score:
| Credit score | Average APR, new car | Average APR, used car |
|---|---|---|
| Deep subprime: 300-500 | 15.77% | 21.55% |
| Subprime: 501-600 | 13.18% | 18.86% |
| Nonprime: 601-660 | 9.83% | 13.92% |
| Prime: 661-780 | 6.87% | 9.36% |
| Superprime: 781-850 | 5.25% | 7.13% |
If you’re considering an auto loan through a credit union, be aware of a practice known as cross-collateralization. This clause might appear in loan documents, and it’s particularly common with credit unions.
It allows the car that a borrower is financing through the credit union to be used as collateral for another debt, such as a credit card issued by the credit union. If you stop paying your credit card bill, the credit union could repossess the car it financed for you — even if your car payments are made on time.
It helps make loans less risky and helps a credit union, as a not-for-profit financial cooperative, avoid financial losses that would impact all its members.
You Can Obtain an Auto Loan After Repossession
Auto loans after repossession are available from many lenders. The auto lending networks we recommend work with lenders that specialize in helping borrowers with bad credit, including those who have gone through a car repossession.
Some lenders require waiting one year after a repossession before they’ll loan you the money for a car. Others may provide a loan but may charge a higher rate for the bigger risk they’re taking.
However long you decide to wait to get a loan after a repossession, it can only take a few minutes to fill out an online application from an auto lending network. These networks will often let you know within 24 hours, if not a lot sooner, whether a lender has agreed to work with you. From there, you can quickly get the money to buy a car and get on with your life.
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