What To Expect From A Second Chance Auto Loan

We’re a used car dealer in Houston, Texas which offers a variety of reliable cars at affordable price ranges. We have great financing loan packages to offer and we’re pleased to discuss with you discounts and financing schemes which will fit to your budget.

We specializes in used cars and we’re delighted to offer to you our wide range of car brands and models in our inventory. Please see below a sample of our car inventory.

What is a second chance auto loan?

The second chance auto loan is simply designed for people who have bad credit rating from their previous vehicle loan which prevented them from getting approval on financing for another auto loan. A second chance auto loan also provides an opportunity for the borrower to prove themselves in improving their credit rating by obtaining a second chance loan and making on-time payments.

Nowadays there are a lot of people who fall in the category of having a bad credit rating, thin credit line or having other credit problems. However, there are some lenders and car dealers who offer second chance auto loans to this particular group of people.  We are a used car dealer that does exactly that!

In this type of loan the financed car is used as collateral, However, the borrowers should know that in this kind of loan arrangement interest rates are usually higher due to the risk of the borrowers’ bad credit history. The other factor is the age and mileage of the vehicle and its loan value.

A second chance auto loan does carry higher interest rates but it is a chance to get a new lease on your credit ratings. By responsibly handling this type of car loan you can obtain a vehicle as well as at the same time improving your credit rating by handling this loan responsibly.

Once you have shown to be responsible to the lender you can opt for refinancing the loan at a lower rate which will result in reducing your monthly payments and at a reduced interest rate you will pay less for the vehicles once its all said and done.

With this type of loan you will need to be prepared to but down a reasonably sized down payment. This is designed to have you be invested in the loan and not just walk away and treat it like a rental after a few months.

Obtaining the right type of second chance auto loan

When you’re looking for a second chance auto loan be sure to evaluate which type of loan you’re comfortable with as banks and other lending institutions offer two basic types loan as follows:

Financed by Subprime Lenders through Special Finance Dealership

This type of financing is coursed through dealership which has special finance departments that offer loans to borrowers with bad credit ratings. The buyers get their cars from the dealer but make payments to the lender.

Financed by in-house dealers Some of the in-house dealers don’t utilize third-party lenders but make the financing by themselves and this financing is easier to get. Usually, these dealers don’t look at credit scores for they don’t utilize outside lenders. Payments are made directly to the dealer. These types of in-house auto loans will generally carry a much higher interest rate than the above mentioned so it's likely to be in your best interest to seek out a used car lot that can also offer you a loan thru a subprime lender.

Getting Maximum benefits in obtaining second chance auto loan

Obtaining a second chance auto loan will offer you several advantages as well as long term benefits if handled right.  Moreover, this loan will provide you with immediate funding when you purchase the car. Some of the benefits of this loan are as follows:

  1. Allows you to pull through your failed previous vehicle loan and helps improve your credit standing if you make payments on time and in full.
  2. Gives you the option to choose a car within a realistic budget that is viable as a daily driver. Where most of us do not have the cash on hand to be a reliable vehicle and are forced to buy a cheap car that is not necessarily reliable.
  3. Gives you the ability to get another car even after a repossession.
  4. This loan can be helpful especially when you’re financially down.
  5. Whether you choose a small monthly payment or accelerate your payment, either option will give savings and improve your credit score.
  6. Usually, this type of loan is long term which means the breakup amount is very affordable.
  7. This loan is one of the best ways of getting a car loan after a repossession had been listed on your credit report.
  8. There is no obligation when you apply online via our site to continue with any of our staff who preapproved your loan.
  9. We are confident and will notify you that your loan is approved through email or phone within 24 hours.
  10. The likelihood of credit approval is high because we are connected with many lenders who provide services to all income levels and credit ratings.

Factors affecting interest rate

If you have a bad credit history getting a car loan can be difficult; hence, you can expect to pay higher interest rates. One of the factors affecting interest rates on these loans  is your payment history and how you have handled that with previous lenders for a loan.

A typical interest rate of a car loan for persons who have good credit rating ranges 2.9%  to 8%. However, with persons who have bad credit rating the loan payment is closer to 14% to 20% interest rates and this would result to bigger monthly payments. This is why its advisable to look at refinancing your automobile after paying reliably on time and in full for about a year.

Another thing to consider is the length of time of the loan. With persons having good credit standings they will get longer periods of about 72 months and lower interest rates. Where individuals who have a bad credit rating will be given a shorter period with higher interest rates.

Helping your credit rating increase:

When your planning to make a vehicle purchase on credit just like anything else you try and finance your credit rating is a huge factor. Improving your credit rating before applying for a loan is a great idea and can open you up to being approved by more lending institutions and banks, therefore, giving you a much better base of offers to choose from.

Some of the ways to help your credit rating are as follows:

  • Review your credit report – it is important to undergo this process and evaluate your credit report from the three major agencies such as Experian, Equifax and TransUnion. As you review your credit reports, check for errors and request that they should be removed. A great place to use to get an overview for free is Credit Karma
  • Make it a habit to pay on time – one of the best ways to clean your credit report is to ensure that payments are made on time. A long history of prompt payments is one of the ways of getting a better choice in banks and lenders that will be willing to offer you financing.
  • Get someone to Co-sign – if your credit is completely shot but you have someone that is willing to vouch for you by becoming a co-signer you will have a good shot at getting a loan, if their credit is good that is. This can also help in reducing your interest rates and down payments.

Kind of cars likely financed by this loan:  

We have a wide range of car brands in our current inventory and you may look through it to find the car which matches your budget and need (please check our r used car inventory to see what is currently available). We’re continuously updating our used car inventory so if you do not see what you are looking for contact us and let us see if we cannot find it thru our network .

Downside of second chance auto loan financing:

For people with bad credit ratings that are applying for this type of loan will encounter difficulties of getting approval for a regular loan by prime lenders but using subprime lenders will greatly increase your chances regardless of your credit rating.

Downside of second chance loans is as follows:

  • Buying car using this type of loan will undergo strict credit investigations.
  • The interest rates are generally higher than those of normal car loans.
  • Due to a bad credit rating you’ll not get the preferred financial institutions and banks offering you a loan, rather you will get subprime lenders that will charge a much higher interest rate as well as requiring a good size down payment before approval.

We can offer you loans for all type of credit ratings and from a variety of financial institutions. We can generally approve most income levels as well as credit ratings. Many different forms of income verification are accepted. Simply call us and talk to us about your situation and let us place you with the best lender for your credit rating.