Auto loans after a repossession
A repo doesn't keep you from applying for another car loan. A new lender will see the old account and may ask about any balance left after the sale, so the letters you bring matter.
What a new lender sees after a repo
A repossession goes on your credit reports and can stay there for up to seven years (CFPB).
If the old lender sold the vehicle for less than you owed, plus its repossession costs, the difference is called a deficiency balance. The CFPB notes that a lender can hire a debt collector to collect an unpaid deficiency.
A new lender will see how that account is listed today: an open balance, a payment plan, settled or paid. It weighs that next to everything else, including your income, your other debts and the size of the loan. Insurance can cost more too: the CFPB lists higher insurance rates among the effects of a repossession.
Match your paperwork to where the old loan stands
This is about what to bring, not about contesting the old account. For questions about the repossession itself, talk with the old lender or a lawyer.
Balance still owed
The old lender or a collector may still be contacting you.
- The latest statement or collection letter
- Any payment plan, in writing
Settled or paid
The account is closed out, and the paper proves it.
- The settlement letter, or the paid-in-full letter
Turned in voluntarily
The FTC says a car you gave back yourself can still be reported, and you can still owe the difference after the sale.
- The letters the lender sent after the sale
Behind on the car you have now?
The FTC's advice is to contact your lender right away when payments get hard, instead of waiting for the car to be taken.
You can also have the vehicle appraised at any of our dealerships, whether or not you buy from us, and we handle the payoff with your lender directly.
If you owe more than the vehicle is worth, that gap doesn't vanish in a trade. The FTC warns that some dealers roll it into the next loan, so you keep paying it. Ask to see the payoff and the appraisal side by side before you decide.
Getting your application ready
See what the reports say
Read your reports for free at AnnualCreditReport.com so you know how the repossession and any deficiency are listed before a lender asks.
Document every source of income
Pay stubs, benefits letters and pension statements, plus tax returns for any self-employment. List your income as it really is.
Keep the loan in proportion
Cash, a trade-in or a lower price all cut what you borrow. The CFPB lists your down payment against the vehicle's value among the things lenders weigh.
Budget for the whole cost
The Attorney General's office suggests counting the payment, gas, insurance and maintenance before you shop. Leave room for an insurance increase after the repo.
Get your Fresh Start plan
Tell us where the old account stands and pick your dealership. Its finance team will tell you which letters a lender is likely to want.
- Pick your town, then the dealership
- No Social Security number asked
- The dealership's finance team follows up with you
This isn't a credit application. When you apply, lenders check your credit and each lender decides. Approval is never guaranteed.
Questions people ask
Can I still get financed after a repo?
You can apply, though approval is never guaranteed. A lender will see the repossession and where the old account stands now, along with your income and the rest of your credit history, and it decides from there.
How long does a repossession stay on my credit report?
Up to seven years, the CFPB says. Paying or settling the old balance later doesn't restart that clock.
Do I have to pay off a deficiency before I can finance again?
Each lender decides how it treats an unpaid deficiency. Bring the latest letter or statement that shows where the balance stands, so the lender doesn't have to guess.
Is a voluntary repossession treated differently?
It can still show up on your credit report, and you can still owe the difference after the sale, according to the FTC. Bring the lender's letters either way.
Can I trade in a car that's about to be repossessed?
You can bring it in for an appraisal. If the payoff is higher than the appraisal, that gap may be added to your next loan, so look at both numbers before you decide, and talk with your current lender too.
Will my car insurance go up after a repo?
It can. Get an insurance quote on the vehicle you're considering before you sign, so you know the full monthly cost.
Letters in hand?
Answer a few questions, pick your dealership, and its finance team takes it from there.