Second Chance Car Loans: Are They a Good Idea For You?

Second Chance Car Loans: Are They a Good Idea For You?

Posted on March 31, 2022

Today’s post is another of those prompted by a customer question. This time it was ‘What is a second-chance car loan and are they any good?’ Our Ohsweken auto loan team explains.

A second chance auto loan is just another term for subprime lending or bad credit car loan. It’s the same type of product by a different name. The term ‘second chance’ just means you get another chance at a loan even if your financial life hasn’t been the most straightforward.

We’re not fans of the term to be honest. Many Canadians we deal with have poor credit through not fault of their own. Terms like ‘second chance’ implies it was something they did, when often they had no control over how things went.

Anyway, back to bad credit auto loans.

Second chance means bad credit auto loans in Ohsweken

Bad credit auto loans are exactly what their name implies. Credit products designed specifically for those with less than perfect credit.

Credit scores are figures between 300 and 900. The closer you are to 900, the better your credit. Anything less than 660 and are regarded as subprime, which means you’ll likely need to use bad credit auto loans.

It’s important to note that different lenders have different ideas of what bad credit scores are. That’s why we linked to Equifax above. They provide a fairly accurate view of what many lenders refer to for credit scores.

How to get a second chance or bad credit auto loan

The application process for a bad credit auto loan is largely the same as for a standard loan. Work with lenders you know or specialists in bad credit auto loans like us here at Northway Ford.

Prepare your application in advance. Get your proof of ID, address and income together. Get three months of bank statements and proof of any other income.

Get auto loan preapproval as it helps set your expectations and lets you know how much you could borrow and at what rate. You don’t have to go with the lender you prequalify with, it just gives you an idea of what you’re able to borrow.

Once you’re ready, contact our Ohsweken auto loan team and we can help with the application.

What you need to know about the second chance car loan

Ohsweken bad credit auto loans are viable ways to access credit regardless of your position. As long as you can afford the loan, you can usually get one. There are a couple of things you need to know though:

Bad credit auto loans have higher interest – As these are regarded as risker loans, you‘ll pay a higher interest rate. The rate will depend on your credit score but it will be higher than a standard loan.

You’ll need to prove everything – Lenders will want to see evidence that you can afford the loan, evidence of any other debt and to see that whatever caused your bad credit situation has been addressed. This is a benefit of these loans but also requires more work from you.

Down payments can lower the rate – Down payments are always a benefit in auto loans but the more you can put down, the more reassured the lender will be. This can be reflected in higher chances of acceptance and/or lower interest rates.

When you’re ready for a car loan, get in touch with the Ohsweken auto loan experts at Northway Ford for great deals on auto finance.

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