Best Credit Cards After Vehicle Repossession

Best Credit Cards After Vehicle Repossession

July 11, 2016         Written By Jason Steele

LowCards is a Citi partner. These offers, valid when the article was written, may have expired. View our full editorial disclaimer here.

It can be incredibly challenging to deal with the aftermath of a vehicle repossession. When this occurs, you will not only lose your car, but your credit will suffer tremendously. A lender can repossess a vehicle after you have defaulted on your payments, which itself will hurt your credit score dramatically. And once the vehicle is repossessed, you could still owe money on the loan if the vehicle’s sale wasn’t enough to cover your remaining balances.

Rebuilding your credit after repossession

The first thing you will want to do after a repossession to help rebuild your credit is to make sure the vehicle loan is paid off. Any remaining money owed after the sale of the vehicle is called a “deficiency balance,” and it will remain on your credit report until it is paid off. Therefore, check your credit report and attempt to settle any outstanding balance with the lender, which will be critical in your effort to “stop the bleeding” before rebuilding your credit.

Featured Card

Top Features:

But once that debt is paid in full, you will then have to start the process of re-establishing a positive credit history, even though you will have a poor credit score. Opening a new account is one of the only ways to build your credit, but it will be very difficult to get a new loan with a low credit score

The solution is a product known as a secured credit card. A secured card works much like a standard credit card, except you must submit a refundable security deposit before your account can be opened. Then, you can use your card the way you normally would, and increase your credit score by making timely payments each month. It can take as long as seven years before your repossession drops off your credit report, but you can mitigate that damage by opening up a secured card account and being very careful to make on-time payments.

In the meantime, a secured credit card offers the convenience and security of a standard credit card, including more protections against fraud than is offered by debit cards, prepaid cards, cash or checks. A secured card can also offer features such as purchase protection, extended warranty coverage and rental car insurance.

Here are four of the best secured credit cards that you can qualify for after repossession:

Capital One Secured MasterCard

Capital One is a major credit card issuer that also offers a secured card. The Capital One Secured MasterCard requires a refundable deposit of $49, $99 or $200 based on your creditworthiness. The minimum deposit will result in a $200 initial credit line, but you could receive a line of up to $3,000 with a higher deposit. Benefits include auto rental insurance, travel accident insurance, and 24/7 travel assistance services. You are also covered by an extended warranty policy and a price protection program. The standard interest rate for purchases is 26.99% (Variable). There is no annual fee for this card and no foreign transaction fees.

Citi® Secured Mastercard®

Citi is another well known credit card issuer and a major retail bank. The Citi® Secured Mastercard® requires an initial refundable deposit of $200 to $2,500, with a credit line equal to the deposit submitted. The standard interest rate for this card is 22.49% (Variable).

primor® Secured Visa Gold Card

The primor Secured Visa Gold card is issued by Green Dot Bank. It has a generous 25-day grace period and no penalty interest rate. This card has an annual fee of $49 and a 9.99% standard interest rate for purchases. There are no minimum credit scores needed in order to obtain this card.

OpenSky® Secured Visa® Credit Card

The OpenSky Secured Visa card issued by Capital Bank offers a credit line of between $200 and $3,000 and has competitive terms. It features a 25-day grace period and a standard APR for purchases of 17.39% (variable). There is no credit check necessary, and it boasts an application time of just five minutes. It also reports your payments to the three major consumer credit bureaus to ensure that your credit score reflects your payment history. Otherwise, this is a fairly basic card with an annual fee of just $35.

Consumers with low credit scores should do everything possible to increase their score. One new tool on the market may provide some help in this area. Add your positive utility payment history to instantly increase your FICO® score. Experian Boost™ helps by giving you extra credit for the utility and mobile phone bills you’re already paying. (Results may vary; see website for details.)

The most important tip is to make every payment on-time as your payment history is one of the most critical factors on your credit report. To help you to do this, you can enable payment notifications and reminders via email or text. You can also schedule automatic payments from the card issuer or from your bank. And once your credit score rises, you can receive your refundable security deposit back and apply for a standard unsecured credit card.

By using the right credit card, you can begin rebuilding your credit after you have been through a vehicle repossession.

The information contained within this article was accurate as of July 11, 2016. For up-to-date information on any of the terms, cards or offers mentioned above, visit the issuer's website. Many of the offers on this article are from our affiliate partners, and LowCards.com may be compensated if you take action with any of our affiliate partners.

Review LowCards.com Editor’s Top Cards!

2020 Top Credit Cards by Category
Featured Fair Credit Card
Reflex Mastercard® Credit Card
EDITOR RATING
Featured Fair Credit Card
Reflex Mastercard® Credit Card

Applying for this card will securely direct you to the issuer's website.

Top Features: All credit types welcome to apply!

Featured Low Interest Card
ABOC Platinum Rewards Mastercard®
EDITOR RATING
Featured Low Interest Card
ABOC Platinum Rewards Mastercard®

Applying for this card will securely direct you to the issuer's website.

Top Features: No annual fee; $150 statement credit after spending $1,200 in first 90 days; 0% on Purchases for 12 months

Featured Bad Credit Card
First Digital NextGen Mastercard® Credit Card
EDITOR RATING
Featured Bad Credit Card
First Digital NextGen Mastercard® Credit Card

Applying for this card will securely direct you to the issuer's website.

Top Features: Reports to all three credit bureaus, perfect credit not required for approval

Featured Good Credit Card
Petal® Visa® Credit Card
EDITOR RATING
Featured Good Credit Card
Petal® Visa® Credit Card

Applying for this card will securely direct you to the issuer's website.

Top Features: No fees whatsoever. No late fee, international fee, annual fee, or any-other-kind-of-fee, fee


jasonsteele

About Jason Steele

Jason Steele is a journalist that covers credit cards, travel and consumer credit. As one of the nation's leading experts in credit cards, Jason has contributed to dozens of travel and personal finance outlets including NerdWallet, Credit Karma and the Points Guy, where he serves as the Senior Points and Miles Contributor. Jason has also been widely quoted in mainstream media in outlets such as the Washington Post, the USA Today and Bloomberg Business Week. Jason is also the founder and producer of CardCon, which is the annual Conference for Credit and Credit Card Media.