Can I still get a car loan if I've had a repossession?

My car was repossessed about three years ago. Can I buy another car with a loan after a repo?

Answer
In the grand scheme of things, yes, you can get a car loan after you’ve had a repossession. However, it may come with some less-than-ideal terms that make it a poor idea.
When your car is repossessed, your credit score takes a massive hit, often dropping somewhere between 100 to 200 points or more. To make matters worse, the mark stays on your credit history for seven years.
Since your repo occurred only three years ago, it remains on your account. That isn’t to say that you can’t get a car loan. But even if you are approved for one, the loan may not be worth the interest rates you will have to pay.
Buy here pay here dealerships and subprime lenders will be more likely than traditional lenders to extend you a loan. It will most likely come with double-digit interest rates though, depending on your current credit score, income, and debt-to-income ratio.
At the very least, you could always shop around, apply, and see what lenders are willing to offer you—but be wary. If the interest rate is more than 10%, don’t sign the loan. Not only will you pay way too much interest on a depreciating asset, but you’ll also be upside down on the loan, meaning you owe more than the vehicle is even worth.
Paying cash for a car is a far better option. Get a set of wheels for a price that’s more within your budget, then use the extra cash you save to pay down old debt, thereby increasing your credit score.
It’s a long time to wait, but after four years, your credit should look that much better with the repossession in your rearview mirror. Then, you can apply for a new car loan.
To save even more money on car expenses, download the Jerry app. A licensed broker, Jerry does all the hard work of finding cheap quotes from the top name-brand insurance companies and buying new car insurance. Just choose a policy and price within your budget, and Jerry will take care of the rest. The average Jerry user saves $879 a year.
Eric Schad
Answered on Nov 15, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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