# Second-chance car loans: What they are and how to get one

> Second-chance car loans help drivers with bad credit buy vehicles but come with high interest rates.
- Title: Second-chance car loans: What they are and how to get one
- Summary: Second-chance car loans help drivers with bad credit buy vehicles but come with high interest rates. Second-chance car loans cater to borrowers with subprime…
- Keywords: second-chance auto loan, subprime credit, auto loan, interest rate, credit score, used car loan, new car loan, loan terms, credit reporting, car dealership, business, finance
- Source: Yahoo Finance — https://finance.yahoo.com/markets/currencies/articles/second-chance-car-loans-one-210834465.html
- Published: 2026-09-17T15:02:40+00:00
- Read time: 1 min
- Topics: second-chance auto loan, subprime credit, auto loan, interest rate, credit score, used car loan, new car loan, loan terms, credit reporting, car dealership, business, finance
## What are second-chance auto loans?
A second-chance auto loan is an auto loan for borrowers with subprime or deep subprime credit.
## Higher interest rates for subprime borrowers
Subprime borrowers face an average interest rate of 19.10% compared to 6.29% for borrowers with excellent credit.
## Eligibility for second-chance loans
Lenders require minimum credit scores and income, with some considering other factors for deep subprime borrowers.
## Where to find second-chance loans
Dealerships, online lenders, and banks with credit unions offer second-chance auto loans for borrowers with poor credit.
## Monthly payment costs
Subprime borrowers pay an average monthly payment of $567 versus $534 for borrowers with excellent credit.
## Credit reporting concerns
Some lenders do not report loan activity to credit bureaus, preventing credit building through on-time payments.
## Interest rate comparison
A 9% interest rate on a $26,000 loan with a 60-month term costs $6,383 in interest versus $14,467 at 19%.
## Additional devices for repossession
Buy-here, pay-here lots may install GPS trackers or starter interrupters to make repossession easier.
## Scams to avoid
Be wary of deals that seem too good to be true, as they may be yo-yo scams or other car-buying scams.
## Alternatives to second-chance loans
Add a cosigner, improve credit, or buy with cash to qualify for better loan terms.
## Bottom line
Second-chance loans may not be the best option; improving credit health could lead to better loan terms.
## Key takeaway

Second-chance car loans cater to borrowers with subprime credit but charge higher interest rates, potentially costing hundreds more per month.