A car repossession can have a long-term impact on your life. Not only does it appear on your credit history, but it can have an impact on your income. If you are preparing to apply for a loan to purchase a car, here are some tips to keep in mind.
Know Your Credit History
Although you have a repossession on your credit history, it does not automatically mean that your credit is as bad as you believe. There is a possibility that there is enough good to still make you attractive enough for creditors.
If you notice any errors on your credit history, take action to have them remedied. Errors, such as incorrectly noted payment, can have an impact on your credit score. Contact the creditors and the credit reporting agencies to get the information corrected.
You should also consider holding off on making applications for new lines of credit elsewhere. Inquiries can negatively impact your credit. You can also shrink the amount of available credit you have with each new account opened.
Save Your Money
Unfortunately, since you do have a repossession, lenders are more leery about taking a chance on you. However, a solid down payment can help ease a lender's inhibitions about funding your purchase.
Although many car buyers put down less on a car, you need to try to have at least 20 percent of the purchase price of the car. If you cannot afford to save that much, consider buying an used car. The recommended down payment for a used car is about 10 percent. Remember, once the car is paid off and you have worked to rebuild your car, you can get a newer car later.
Be Smart About Your Car Choices
Although you might be approved for a more expensive car, opting for a less expensive car could be best. You want to ensure that you can afford to make the payments on time. By doing so, you can improve your credit situation.
However, if you opt for a car that is too expensive and you hit a financial road block, another repossession could be more difficult to overcome. By taking the less expensive car, you can avoid a situation in which you would be left without a reliable mode of transportation in the future.
If you are prepared to buy a car, consult with a reliable auto financing lender to learn what steps you need to take to apply.