A Second Chance at Car Finance
For different reasons, most individuals get themselves with a credit score, which is too low to qualify as subprime. This is often called bad credit.
But the great news is that lenders acknowledge the fact that people with subprime credit also need transportation.
Although those loans may cost a lot more, second-chance car loans can give you a chance to get a much-needed car and might help to rebuild your credit if you consistently make repayments.
What Second Chance Financing Is
Second chance financing is basically another word for bad credit car finance. They are designed for auto buyers struggling with credit problems and are offered through some dealerships, which work with finance loans in-house or subprime lenders.
What makes financing through subprime lenders great is that it allows car buyers to finance a car and work on their credit score. Once approved, provided you keep up with all your repayments by paying them on time, your credit score will improve over time.
Where to Find Second-Chance Car Loans
A lower credit score doesn’t necessarily have to prevent you from buying or financing a vehicle. Consider checking with your credit union or local bank to determine whether they provide car loans for auto borrowers with a bad credit score.
If you don’t get car loans from lenders, you can get finance through second-chance dealers. These dealers are commonly referred to as buy-here-pay-here, serving vehicle buyers with bad or without credit scores.
If you are able to prove that you have sufficient cash to make monthly repayments, you may get a car loan through one of the dealers. Other options you can consider are:
- No-haggle dealerships
- Capital One
What to Look for in a Second-Chance Car Loan
Before you take or consider a second-chance auto loan, there are a few aspects to consider. One of the factors you need to consider is whether you may afford to make monthly repayments. Normally, second-chance auto loans include a high monthly repayment since lenders assume you will find it hard to pay them off. This high risk usually leads to higher interest rates.
It is also important to research all the fees. These may include prepayment, monthly account, finance, and application fees, just to name a few. Be sure not to sign any paperwork until you determine what you should be paying.
Finding and Applying for a Second-Chance Car Loan
Every time you are getting a second chance car loan, be sure to look for a program, which supports your goals, especially if you are looking to restore your credit history. Second-chance car loans with features encouraging on-time payments offer a better chance to get the right car you want and start building your credit.
Whether your poor credit score stems from a discharged bankruptcy, repossession, or several late repayments, applying for a second-chance car loan is simple. With the right lender, your application will only take a few minutes.
Second-chance car loans are a lifesaver. But it might as well turn out to be a burden. This is why doing enough research to get the right second-chance car loan and lender will go a long way toward making a better decision.