Auto Loans for People with Poor Credit and ‘Repos’

Is it possible to get an auto loan after a repossession?

Yes, it’s completely possible. Depending on the dealer you’re working with it could be very easy or very hard to get car financing after you’ve had a car taken by the bank. Ironically, the easiest lending situations won’t always be the most desirable for you. Let me explain:

Certain car dealerships – usually those with the somewhat homemade looking banners hanging on the front of their office that say “everyone is approved!” – should be avoided like the plague. Here’s a quick glimpse into how they operate: first of all, they take used cars of questionable dependability and they price them something like 20% above their bluebook value. Then when you come into look at cars, they tell you you can be financed as long as you can put around 20% down. See what’s happening there? You’re paying cash for the 20%, unjustified markup, which means before you ever make a single payment you’ve already given them a really nice profit on the car.

This is why getting no credit check auto loans with repo can be so risky. Once you’ve made the ridiculous down payment they’re going to tell you that they’ll finance the remaining amount at something like 23% to 25% interest. So now they have your 20% down payment and you’re on the hook for high payments at a ridiculous interest rate. These dealers aren’t stupid – they know your track record with making payments. They know there’s probably a 50/50 chance you’ll start missing payments, which means they’ll come repossess the car. So they take the car back, keep your down payment plus any additional payments you’ve made, and then wait for you to come into to plead your case.

This is an almost no-lose situation for the shady dealer who’s offering to finance a car after your repossession. One of three things will happen:

1. You’ll come into the office, get current on your payments, take the car, and keep making payments at the 25% rate.
2. You’ll walk away from the car, which lets the dealer keep all your money and then resell the car to some other poor credit borrower.
3. You’ll decide that car was too much for you to handle financially, so you’ll make a new down payment on a different car, and start the ugly cycle over again.

Do you see how it would be best for you to avoid this whole situation in the first place? It’s going to be much safer and smarter to work with a dealer that actually cares about its reputation. The terms of the auto financing after a repo may not be much better, but they’ll have less desire to treat you poorly.