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Can you get a car loan with a charge off?
I had a previous car loan charged off three years ago. I’ve worked to improve my credit score and have tried to pay all my bills on time. I’m starting a new job and need a car. Am I able to get a car loan with a charge off?
Will Baldwin · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Working to improve your credit score after a charge off is a great financial decision. While charge offs stay on your credit report for seven years, you can still get a car loan with a charge off.
That said, it can be difficult to find a lender. Since you’ve had a charge off previously, lenders may deem you too much of a risk. However, if you’ve managed to improve your credit and pay your bills on time, a non-traditional lender may be willing to finance a new car.
To get a car loan, you’ll want to:
- Shop around. While you can try a bank or credit union, many reputable lenders specialize in loans for high-risk borrowers.
- Get acosigner. A cosigner with good credit can help you get approved for a car loan, even if you have a charge off. Since cosigners are responsible for the loan should you default, lenders are more willing to extend credit.
- Make a large downpayment. If you can save enough money for a larger downpayment, you’ll likely have more options. Making a large downpayment reduces the amount a lender has to finance and your riskiness as a borrower.
If you find a lender and purchase a new car, ensure you have the best car insurance on it. If you’d rather leave the hard work of gathering quotes to someone else, use
Jerry
. The Jerry app collects quotes from over 50 top insurance companies, like Nationwide and Travelers, in seconds! They even help cancel your old policy once you’ve made your pick. View full answer
- Gregory R.
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Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.
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