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What Is Second Chance Auto Financing?

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As the name suggests, second chance auto financing refers to auto loans lent to people with a bad credit history. Generally, car loans and other automobile loans are given to people who have a good credit score or a history of paying back money well within the stipulated time. But second chance auto loans lend you money even if you have a poor credit record or previous bankruptcy. However, there are many terms and conditions for that. This is a short guide to help you get your hands on a second chance car finance in USA, India, or anywhere else.


How Can You Get A Second Chance Auto Loan?

Though it is possible to manage a car loan even with a bad credit history, it is not an easy task. However, you can try out the following methods to get yourself a second chance at auto financing.

  • Before you go ahead looking for a second chance auto loan, get your credit report checked. Errors are committed sometimes while calculating the credit score. Check if your past credit score reports have anything like that.
  • In case your credit score has been calculated correctly and is devoid of any mistakes, you can start searching for a second chance car financing. It is generally advised to approach a credit union before looking for an independent private dealer. Check out if the financial institution you deal with has a bank or credit union.
  • You can try to increase your credit score before approaching for a second chance auto loan. It might take some time for you to restore or establish a better credit history, but your job will become much easier if you succeed in doing so.
  • You can take a cosigner with you when looking for a second chance car loan. Taking a creditworthy cosigner will increase your chances of getting a second chance loan by manifolds. But you have to keep one thing in mind. In case you fail to pay the money back in time, not only will you face the consequences for being a defaulter, but so will your cosigner.


There are mainly two types of money lending if you are looking for a second chance car loan – indirect financing and in-house financing. In indirect financing, you meet with a finance manager and finalize the deal without meeting the money lender directly. On the other hand, in-house financing is when the lender and dealer are the same and there is no involvement of any third-party lenders.


Even if you manage to secure a second chance at auto financing, there are a lot of implications of the same that are noteworthy.

  • The interest rates applicable for a second chance auto loan seeker are higher than a person with a good credit score and financial history.
  • You might have to pay more for the same car compared to someone who has good credit history to back her/him.
  • Since you are a ‘risky’ borrower, there is a possibility that you have to pay a higher down payment than others.


It is, thus, always better to restore your credit score before going for a car loan or build a good one right at the beginning. Once it starts to worsen, it becomes difficult to manage. Go through this link for more options

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