A car repossession is a horrible thing – and we don’t want anybody to go through it. But it happens. Sometimes, Canadians buy cars that they can’t afford, or circumstances are such that they simply can’t make their car payments.
When this happens, loan companies and auto dealers will repossess your vehicle – and if you can’t get it back, you may end up under serious financial strain, and without a vehicle to get you where you need to go.
1. Figure Out What Went Wrong
The first thing you need to do after getting your car repossessed is figure out what, exactly, went wrong. Of course, there are situations where your car will be repossessed and it was not your fault. Maybe you had to pay some emergency bills, or lost your job and couldn’t make your payments.
But other times, it may be because you bought a car that was too expensive, or that you really couldn’t afford at the time. Take a little while to think about why your car was repossessed – and think about the ways you can avoid repossession in the future.
2. Get Your Finances In Order And Pay Down Debt
For the short-term, you’ll need to get your finances in order. Folks in Canada who have bad credit often do not understand where their money is going every month – and this leads to bad situations.
Sit down and calculate your monthly take-home income, and the debt that you have to pay off every month. In addition, you should budget out other expenses like rent, auto insurance, groceries, and any other expenses.
After you do this, you can start prioritizing the debts you need to pay down. For example, if you can pay off a credit card bill entirely instead of making monthly minimum payments, you’ll be able to save hundreds of dollars a month in interest – which leads to better financial health!
3. Find A Short-Term Transportation Solution
Unfortunately, many areas of Canada do not have the best public transportation systems. But there are usually some buses and other public transit resources in your area. Do some research, and see how you can get where you need to go without a car.
You could also consider investing in a bicycle, but this will probably not be very useful during the winter. If you’re able to get to work, stores, and other locations without a car, you’ll be able to concentrate on the next step of the process.
4. Try To Rebuild Your Credit As Much As You Can
If you want to apply for another auto loan, you’re probably going to want to rebuild your credit before attempting to purchase your car. Repossessions negatively affect your credit score by quite a bit. In addition, your credit score can be affected by:
- Late payments
- Cancelled credit cards
- A large overall debt burden
- Outstanding debts send to collection agents
Visit Equifax or TransUnion for your free yearly credit score, and start thinking about how you can rebuild your credit by paying down your debts or using a secured credit card. By taking the proper steps, you can easily raise your score quite a bit within just a few months.
5. Start Saving For A Down Payment On A Reasonably-Priced Car
When you have bad credit, it’s a good idea to save up for a large down payment on a car – rather than putting no money down, and paying more each month.
A large down payment makes you less of a risk to credit lenders, and reduces the total interest that you’ll have to pay on your auto loan – as well as the total cost of your monthly car payment.
Make a budget, and try to cut costs wherever you can to save more money for a down payment. Expenses like going out to eat, or going to bars, for example, are great places to start.
You can also cut the amount you spend on clothing, or start shopping at a more inexpensive grocery store. Over the months, these savings will add up – and you’ll be in a much better financial position when shopping for a used car.
Need Another Car After A Repossession? Come To Ride Time Today!
At Ride Time, we believe in second chances. Bad things happen to good people – that doesn’t mean you don’t deserve a great used car!
With our network of specialized lenders, we can help you find a great deal on a used car as long as you can provide us with proof of 3+ months of employment, a $1,500/month income before deductions, and a valid Canadian driver’s licence – even if you have bad credit in Canada.