Need a Second Chance Car Loan? That's OK!

Let's face it, no one wants to admit they need a second chance car loan – and who can blame them? Bad credit auto financing has gotten a bad reputation in the past. You may have heard that you can only buy an older used vehicle, that your interest rate is going to be through the roof, or that you can only go to a buy here pay here car lot. This is simply not true. Today, there are many options available to people who struggle with bad credit – you just need to know where to go.

Why You Need Second Chance Financing

Need a Second Chance Car Loan? That's OK!A lot of people depend on bad credit auto financing to get the vehicles they need. If you've been turned down for a traditional car loan, you may unexpectedly have to count yourself as one of them, but that's OK –that's why bad credit financing exists.

These loans, also called second chance auto loans, can help you get the vehicle you need while you're rebuilding your credit with on-time payments.

To understand why you need a second chance loan, you first need to understand why you were turned down for a traditional one. There are several reasons you can be turned down for a car loan, including:

  • You have no credit – If you don't have any credit history to speak of, also known as having a thin credit file or being a credit ghost, it's difficult to get an auto loan because lenders can't see a record of how you've handled credit. Without enough information, a lender is less likely to approve you for a loan.
  • You have bad credit – Lenders look at your credit score to determine whether or not to approve you. Each lender has their own qualifications they require borrowers to meet, and if your credit score is too low to meet the requirements of a particular lender, you're not going to get approved.
  • You don't have enough income – Each lender has income requirements you must meet. When you apply for a car loan, a lender checks that you have enough income to meet their minimum requirement as well as enough available income to afford an auto loan. If you bills and expenses already account for more than half of your pre-tax income each month, lenders aren’t going to approve you – especially if your credit is on the lower side.
  • You don't have verifiable income – When you're applying for a loan, lenders want to be assured that you can keep up with payments. One of the things that most lenders require is verifiable, W-2 income. Lenders typically need to confirm that the income you receive comes from a steady source that's likely to last through the loan term.

These are some of the most common reasons borrowers are turned down for traditional car loans. One of the best things you can do for yourself is to check your credit score and reports before you apply.

By knowing where your credit stands beforehand, you can research common rates and loan terms for your credit range, and have a good idea of whether or not you might qualify for a traditional loan.

If you look at your credit and discover that you have a low credit score or a thin credit file, you should also know that there are ways you can build credit, and one of them is a bad credit auto loan.

What's Required to Get a Bad Credit Car Loan?

Now that you know you need to get a second chance car loan, you should know what subprime lenders – those that deal with bad credit borrowers – require. Each has their own rules, but they generally all require the following five things:

  1. Proof of income – A recent pay stub showing year-to-date income of $1,500 to $2,000 a month before taxes. Subprime lenders require this from a single source of W-2 (earned) income.
  2. Proof of residence – A current utility bill in your name at the address where you live. It must be the same address used on the auto loan application.
  3. Proof of a working phone – A bill for a contract cell phone from a national carrier or a landline in your name. Prepaid phones don't qualify.
  4. Personal references – A list of five to eight personal references, including names, addresses and telephone numbers, is typical. These can be friends, family members, or coworkers.
  5. A down payment – You usually have to make a down payment when you take out a bad credit car loan, but the typical requirement shouldn't break the bank. Lenders generally ask for $1,000 or 10% of the vehicle's selling price, whichever is less.

Finding Your Bad Credit Auto Loan

When you need a bad credit auto loan through a second chance lender, you have to go through a special finance dealership. Subprime lenders work exclusively through these types of dealers, and the finance manager there acts as the point of contact between you and the lender. It can sometimes be difficult to pick out a special finance dealership – they don't all advertise that they work with bad credit borrowers.

Special finance dealers range from franchised dealerships to independent car lots, and it can cost you a lot of time and gas money driving around town looking for the right one. However, you don't have to waste your time or money if you let us help! Here at The Car Connection, we work with a nationwide network of special finance dealers that have the lenders you're looking for.

Simply fill out our easy, hassle-free auto loan request form, and we'll get to work matching you with a dealership in your area. What are you waiting for? Get started today!


Auto Insurance

Find insurance in your area.

Financing with The Car Connection

At The Car Connection, our goal is to remove the challenges of getting financed for a vehicle. Through technology, flexible financing options and exceptional customer service, we want to give you the power to control your car-buying experience.

  • All Credit Types
  • No Obligation
  • Easy and Secure
Get Started