You may have seen ads talking about second chance credit financing or perhaps you recently applied for a car loan and were turned down, but you really need a new vehicle. The simple idea behind second chance credit financing is that it offers buyers with less than ideal credit an opportunity to get a loan and purchase their next vehicle.
On the flip side, because poor credit is considered riskier, the loan will have a higher interest rate, adding often thousands of dollars to the price of your next vehicle. So, should you still go ahead a get a second chance credit loan?
Well, as with everything, that will depend on a few factors.
Firstly, you need to ask yourself if you really need to purchase a pre-owned vehicle. If you are moving to an area without public transportation, for example, or you need a car for work because you have to travail a lot during the week, then you probably do need a vehicle. On the other hand, if you are bored with your current vehicle, or you want a second car but won’t necessarily be dependent on it, you probably want to avoid taking out a loan with a second chance credit loan.
That’s because the interest rate on such a loan will be much higher than an average loan. Therefore, you will pay thousands of dollars more.
If you determine that you do need a loan, then the next step is to plan your budget. On the bright side of things, the second chance loan can serve to improve your current credit score and, after a while, make it possible to get another loan at a much better interest rate. Therefore, you want to make sure that you will be able to meet your monthly obligations and so, you need to plan ahead and determine the monthly payment that you can afford.
Thank you to Jonker Nissan for their help with this article.