How Long do Repossessions Remain on my Credit Report?
Having a vehicle repossessed can be financially devastating. You lose your mode of transportation and you usually end up owing thousands of dollars even after the car is sold at auction. Any remaining loan balance plus repossession fees, storage fees, attorney fees and auction charges are all still owed. To make matters worse, your credit is severely damaged.
Your credit report will show the repossession as well as your late payments. This information about your repossession will remain on your credit report for 7 years. Getting approved for a subsequent loan will not be a pleasant experience.
Car dealers sometimes advertise that they can get you approved on a new car loan, even if you have had a repossession. This may sound tempting, but consider the cost. Your interest rate will likely be around 25%. What this means is you will end up paying for 2 cars but will only receive one. That $15,000 car will cost you a total of $31,892.66. What the dealer will tell you is that he can stretch your loan out 7 years so that your monthly payment is only $379.67. If you agree to this, you will end up upside down on a car loan where you owe far more than the car is worth. This would pretty much limit your options if you wanted to sell or trade that car in.
If you need to purchase another vehicle, your best option will be to pay cash. Look for a reliable used car that should get you through the short term while you try to rebuild your credit. It simply is not worth the expense of getting a high-interest loan. If you do get a loan, know what the loan will cost you. The dealer will try to seduce you with a lower monthly payment. Focus on the total of all the payments, the total interest you will pay and the number of years you will have to pay it.