About this guide: St Pete Mitsubishi is a car dealership, and we earn money when customers finance vehicles with us. We've written this guide to be accurate and useful whether or not you buy from us — including the parts that suggest waiting, saving more, or spending less. Written by St Pete Mitsubishi
A car repossession can make financing more challenging for a while. The amount of time you'll need to wait depends on your choice of lender, your credit history, and how much progress you've made rebuilding your finances.
Key Takeaways
- Many traditional lenders prefer borrowers to wait at least 12 months after a repossession before applying for another auto loan.
- Buyers with multiple repossessions may need to wait closer to 24 months.
- Improving your credit score, paying any remaining balances, and saving for a down payment can increase your approval chances.
How Long Do Most Lenders Want You to Wait?
There's no law that says you have to wait a certain amount of time after a repossession before buying another vehicle. Instead, every lender sets its own requirements.
Traditional banks and most credit unions prefer to see at least a year's worth of positive payment history before approving a new auto loan. If you have more than one repossession, that waiting period may stretch to two years.
Can You Buy Another Car Sooner?
You can. Some subprime lenders and Buy Here, Pay Here dealerships finance buyers with recent repossessions. Rather than focusing primarily on your credit history, these lenders often place more weight on your current income and ability to make monthly payments.
That flexibility can make it easier to qualify, but there's a downside. These lenders often charge higher interest rates or have larger down payment requirements.
What Can Improve Your Chances of Approval?
If you still owe money after your vehicle was sold, paying off the deficiency balance should be your top priority. (Outstanding balances can make lenders more hesitant to approve another loan.) Make sure to also review your credit reports for any errors and dispute them if inaccurate. From there, focus on paying bills on time, reducing existing debt, and keeping credit card balances low.
Saving for a larger down payment can also work in your favor. Putting more money down reduces the amount you need to borrow and lowers the lender's risk. Some buyers may also benefit from applying with a qualified cosigner with strong credit. Before applying, make sure you have documents, like proof of identity, income, and residence, in order. Keeping your credit utilization below 30% can also help improve your overall credit profile.
Some borrowers rebuild their credit by opening a secured credit card or becoming an authorized user on the account of a person with good credit. Others show positive payment history by working with second-chance financing programs or lenders that specialize in helping buyers with credit challenges.
What Should You Do Next?
While the timeline varies from one lender to another, you can improve your options by resolving outstanding debts and credit report errors and making timely payments. Our sales team can guide you in picking a vehicle and getting reasonable financing. Contact us today for more information!
Financing information: Financing is provided by third-party lenders, not by St. Pete Mitsubishi. Approval, annual percentage rate (APR), down payment, and loan terms are determined by the lender based on your credit history, income, the vehicle, and other factors. Not all applicants will qualify, and no approval is guaranteed. Rates and terms vary and are subject to change. Contact us for terms that may be available to you.
This article is general information, not legal, financial, or credit advice. Every situation is different, and nothing here is a recommendation about your specific circumstances. Rates, lender requirements, and regulations change frequently, and the information here may not reflect current terms. Verify details with the lender before making a financing decision, and consider speaking with a qualified financial or legal professional. St. Pete Mitsubishi is not a lender, a credit counselor, or a law firm.