Find a Second Chance Loan

Need to buy a car, but have bad credit? If you've declared bankruptcy, don't have any credit or just a low score, you're likely to be turned down by lenders. A second chance loan could be an excellent opportunity for you to receive a loan quickly and begin improving your credit score.

What Are Second Chance Auto Loans?

Second chance loans are designed specifically for individuals who have weak or no credit. In many cases, you can qualify even if you've declared bankruptcy. Typically, your credit score can hinder you from getting a loan, but with second chance bad credit loans, you can not only get approved, but take the opportunity to rebuild your credit while you're repaying the loan. However, they do come at higher interest rates. For the second chance car loans, your car is used as collateral, but your credit score is still usually required. You might also need:

  • Your credit history
  • Someone who can co-sign
  • Proof of your income

If your credit history shows that you're making regular payments on things and don't have any recent issues and you have regular income, you're more likely to get a loan. You might even be able to argue for a slightly lower interest rate.

Second chance loans are available because bad things happen. People lose jobs, have business crises, mismanage money and make poor decisions. Lenders know that if they don't lend to people who have bad credit, they will lose a lot of business. But they make up for it with the high interest rates - they're taking a chance by giving you a loan and they want to make a profit from it.

You could qualify for a second chance car loan if you:

  • Haven't borrowed money before
  • Have declared bankruptcy
  • Have a bad credit score
  • Were turned down by lenders

Types of Second Chance Loans

You could encounter two different types of second chance auto loans. The first is the kind you always hear about on the radio, where you're guaranteed a low monthly payment. The vehicles are older models with high mileage and your down payment will be breathtakingly high, which is why you get the low monthly payment. The second is done through the bank. The bank will consider your income, your finances, your budget and give you the amount you qualify for. This might get you a newer car with lower mileage than the alternative because the bank knows you're more likely to pay on the car if the car is a good one. Just don't expect it to be your dream car

Don't forget to consider other options. If you're turned down for a loan, then you still meet the criteria for a second chance loan, so no harm done. For instance, if you belong to a credit union or a small, local bank you might have more lending options than if you bank with a national or a regional bank. They want to help out their members and members of their community, so if you talk to the credit advisor, he or she might be able to find something for you, despite your poor credit score. It might not be a high loan, but it is a place to start. The interest rates are likely to be lower than with a second chance loan. Additionally, while you're there, you can ask advice about other possible alternatives. For instance, if you own your home, the banker might suggest you consider a home equity loan, an option which provides you with a secured loan that doesn't require a good credit score, but still gets good interest rates.

If you own a car, you might also consider a car title loan. Again, you'd be getting a secured loan with competitive interest rates. The money can be used the way you want, so if you need to buy a second car or want a car that gets better gas mileage, you can get it - or at least get the down payment. While you're repaying your title loan, you continue driving your car.

Installment loans are also available, but these tend to have very high interest rates and should be considered only as a last resort. Same with pay day loans, which have short repayment periods to boot.

What Are the Advantages of a Second Chance Loan?

You already know the biggest advantages of second chance loans: you get a loan and you get to rebuild your credit while you pay it off. The advantages don't end there. Other benefits include:

  • The loan application is free
  • Several vehicles are available
  • Anywhere from 2-5 years to repay
  • Secured and unsecured loan options
  • Loans can be approved in one day
  • Build relationship with local lenders
  • You get a second chance at a loan

However, the interest rates can be high. Remember: not all lenders are created equally. Any time you get a loan, you need to make sure you understand the loan terms and the consequences if you are unable to continue making payments. That's doubly true in a situation like this, because it will definitely affect your credit score. Talk to someone who is willing to help you find the best option or do the comparisons yourself. Consider things like:

  • Fees for the services provided
  • The interest rate you'll be paying
  • The amount of your monthly payment
  • The number of payments you'll make
  • Where you go to make loan payments
  • How you'll be making the payments

Note: Fees should not be charged upfront. Once you've brokered the loan, there will be fees, so ask about these prior to agreeing to the loan. Don't get something you can't afford or it will make things worse. Also make sure to find out how you'll be paying the loan back. Does it come directly out of your check, like a payday loan? Does it come out of your account automatically or will you be writing a check to the lender and paying them in person? If so, where is the lender located? Does one company have lower interest rates, but have an additional year tacked onto the repayment period? Make sure to calculate what you'll pay over the time difference.

All of these questions can help you can get a truly beneficial loan. When you need to get a loan, you can have a second chance, even if you have bad credit. Your second chance auto loan will help you rebuild your credit to get you back on track. Begin your search now.

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