Owning a car is matter pride and comfort alike and I am sure most of us have that dream car we cannot stop swooning over. For a lot us, that dream becomes a reality but life is a funny game with its own share of ups and downs and repossession can be as devastating as foreclosure etc. for many. After all, who would want their shiny new baby to be taken away, right?
But let’s say for some reason you weren’t able to keep up with the loan payment have your car taken away, does it not mean you’ll never be a car owner again? Will you ever be able to get a new loan? Can that credit score reach the credible 600-700 score again? Yes, it can and in this article we’ll tell you exactly how.
What is Repossession?
“Repossession means an automobile lender can retake possession of a vehicle in case of any default payments”.
But in keep in mind, repossession requires a court order and terms and conditions for it have to be mentioned in the sale contract.
Repossession stays on your credit report for 7 years. Though it impacts fades as time passes it can have a serious impact on credit score if calculates steps aren’t taken.
How to Avoid a Repossession?
Make a deal with the lender
If you’ve stopped making payments due to financial stress the first and foremost step is to get in touch with the lender and relay your exact problem to them. In most cases, they’ll agree to an extension. But why do they?
That’s because automobiles that have been repossessed are resold at an auction at half the agreed upon price. In short, your loss is their loss too (an even bigger one), loss lenders usually do not want to face.
Get an attorney
Do you feel cheated? Have you been led into buying the car under a false pretense? Is the car’s condition not as first suggested? Often this feeling can compel you to not make further payments but before you do so getting in touch with an attorney should be the first and foremost step.
How to Rebuild Credit After Repossession?
Review your reports
Yup, repossession can be traumatic emotionally but if you’ve had a good credit score in the past it’s likely your score isn’t a wreck. Have your credit report mailed over by getting in touch with credit bureaus such as Experian, Equifax, and TransUnion.
Credit reports often have inaccuracies such bills paid marked as unpaid or late payments etc. so make sure you run through your credit report line by line. Any inaccuracy can be challenged through authorized channels of the bureau.
Any improvement in the score will not only make getting a loan for a new car easier but since you’ll be viewed as less of a debt risk, you’d be paying lesser interest rates as well.
Confused reading through your credit report? Get help from a credit repair company like Lexington law or if you’re on a tight budget Credit Repair People are the go-to company.
Avoid falling for a credit repair scams and stick to the tried and tested companies mentioned above.
Here’s how you can get it free of cost for starters
Get a secured credit card
A secured card is often the solution to any financial problem like bankruptcy or foreclosure and in this case repossession. So why are these cards easier to get than regular credit cards? That’s because these cards are prepaid. Your limit is set in accordance with the prepaid amount.
This reduces risk on the lenders part and as you continue to make timely payments you can get the limit increased too. The improvement in credit score, however small or slow will make getting regular credit cards easier.
Apart from this, get in touch with your current credit card lenders and promise them regular payments in exchange for no additional fees or interest rates. This works if you have a good past payment record on your cards and is one of the simplest of solutions to improve credit score.
Do not fall back on bills and loans
How many times in the recent past have you paid your bills with a late fee on it? However small the fee, each late payment gets reported to the bureaus, in turn, damaging your credit score.
Keeping up with bills isn’t tough considering you have a budget planned out. Included in this budget should also be ongoing loans. Payment history makes up 35% of your credit score and clearing of debts can me your reports look a whole lot better.
Once you’ve got your credit score on the uptrend again, getting small loans and repaying them quickly can further aid the process (a neat trick from the cheat book).
Pick a car within your limits
Well, repossession once is bad enough, twice could be an absolute nightmare and an important step towards improving credit score is to right your wrongs. So did you buy a car out your means? Could you have done with a cheaper car? If yes, you where you’ve gone wrong and until you don’t get your credit sorted
Questions We Often Get Asked about Repossession
What happens in case of a Voluntary Repossession?
Whether a repossession is voluntary or not the effects are the same. You still owe the loan amount and it will still show up on your credit report. Also, the lender is still legally eligible to send you notices and calls for the payment.
Can a credit repair company help dispute a repossession?
In case negotiations with lenders and banks don’t turn out according to plan, a credit repair company like Lexington Law (cause they’re the best) can provide helping hand. The lender needs to verify the repossession within 30 days and if he can’t repossession can be removed from the report.
These companies have highly experienced and knowledgeable team of experts at the helm that works tirelessly towards the achieving their targets.
Can the Lender Sue Me for the Balance?
Let’s you owed the bank $20,000 at the time of repossession and after the auction sale, they could manage $10,000. It’s very likely that the bank will knock at your door for the remainder of the $10,000 leaving a judgment on your credit report (like having your taken away wasn’t already bad enough).