Getting approved for a vehicle loan immediately following a repossession is possible. However, your odds of receiving a good interest rate are slim. Credit plays a huge role in determining the interest rate on automobiles, loans, mortgages, etc. If you have a major credit blemish, low interest rates are less attainable. Here are a few tips to help you get approved for a low rate vehicle loan.

Increase Your Credit Score Before Applying for Loan

If your credit score is extremely low, applying for a vehicle loan following a repossession is not the smartest move. Of course, cars are practically a necessity. If you are unable to pay for a new or used car with cash, your only option is financing the vehicle. If possible, wait at least six months after a repossession before financing a car.

During this wait period, attempt to improve your credit. When a creditor reviews your credit report and notices a repossession, they will either deny your application or give you a ridiculously high APR.

To reduce the chances of this occurring, try and open new credit accounts. Next, maintain these accounts. Pay monthly minimums on time. The effort you put forth will reflect in your credit report. As you establish a great payment history, your score will increase.

Carefully Select Vehicle Loan Lenders

When choosing a lender for your new or used vehicle loan, do not accept the very first offer you receive. In order to get the lowest rate following a repossession, you must received quotes from several lenders.

Sub prime auto loan lenders are your best option. These lenders give loans to people with poor credit. In some instances, the interest rate offered by these lenders is surprisingly low. To obtain quotes, submit online applications. This method is the easiest and fastest.

After receiving quotes from various lenders, compare their offers and terms. If you are not a good candidate for a low interest auto loan, you may have to settle on a higher percentage auto loan. After six months, refinance the loan for a lower rate.

See my recommended Bad Credit Car Loan companies.

Carrie Reeder is the owner of ABC Loan Guide.