How to Get a Car or Truck Loan After a Bank Repossession
The bad news: after a vehicle repossession your credit will keep you from getting the best car or truck loan at the lowest rate.
The good news: Lenders are now much more lenient towards borrowers with bad credit.
While there is no quick fix to rebuilding credit after a repossession, here are some tips:
Determine What Your Credit Score Actually Is
How bad is your credit score following a recent repossession? You won’t know until you obtain a copy of both your credit score and credit report. Perhaps it’s not as bad as you think and obtaining your credit score is easy to do. Equifax and TransUnion are the two national credit bureaus in Canada. It’s wise to get your credit report and score from both as the information from each bureau can vary. Make sure you check your credit report line by line for accuracy and if you identify an error, challenge it. Your credit score and report are key for lenders to measure risk. The higher the risk, the higher the interest rate. This is why knowing where your credit stands is crucial in seeking financing after a repossession.
Determine What You Can Fix
Repair what you can on your credit report. Settle any balances in collection and compose a plan to bring any past-due balances up to date. Avoiding charging and borrowing when you can will help tremendously, as will making sure you submit payments in a timely fashion. Getting your credit in order requires time, commitment and strong discipline but you can do it!
Save Up a Down Payment
Lenders take down payments seriously as evidence a borrower has their finances under control. The higher the down payment, the better the chances of approval. Alternatively, you can visit a dealership that offers guaranteed financing, just keep in mind that there could be a slightly higher interest rate. It’s always good to have a down payment as it greatly helps reduce the overall amount you will owe on your loan and minimizes your monthly payments as well as really grabbing a lender’s attention.
Get Organized Before Applying for a Loan
A number of documents will most likely be required from a lender and having all these documents ready will show the lender you are organized. Ask a lender what documentation will be required during your initial contact so you can get organized. Such documents usually include a valid driver’s license, recent pay stub, proof of insurance and even your most recent income tax return. Always be truthful with the lender because they will carefully verify every claim and statement you make. They will verify your employment and check your credit extensively. Be upfront.
apply for a loan from a reputable dealership
It’s a good idea to focus on reputable Used Car Dealerships as they have better deals (and many other benefits) on quality vehicles than New Car dealerships or a stranger on Kijiji or Autotrader. Talk to Car Dealerships like The Car Lot etc. who offer Credit Rebuilding Programs – where they report your good monthly payments to the Credit Bureau to help build up your credit rating over the next few years of payments.
Getting a car repossessed strips you of the luxury of buying a car because it’s cool or fast. Think small, basic and reliable. All you need is a reliable mode of transportation. Just remember: it’s better than walking.
If you abide by these tips and use a little patience and discipline, you can make yourself look like a reasonable credit risk even following a repossession. It never hurts to talk to a dealership like The Car Lot etc. to inquire about their financing options. There is no obligation and you can get pre-approved and apply for a car loan online!