How to Get Second Chance Loans with Bad Credit

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Key takeaways

Second chance loans help borrowers with bad credit access funds when traditional financing isn’t available.
These loans often come with high interest rates and extra fees, so only use them for urgent, essential expenses.
Apply through reputable lenders and borrow only what you can afford to repay.

Bad credit can prevent you from borrowing money when you need it most. Be it for past-due bills, medical expenses, or car repairs, your score can hold you back. That’s where second chance loans come in. These loans are specifically designed for borrowers with less-than-perfect credit.

When traditional lenders turn you down, a second chance loan can give you a shot at getting the funds you need. Let’s explore how these loans work to see if they are the right fit for you.

How do second chance loans work?

Second chance loans are personal loans designed for borrowers with poor credit. They are typically installment loans for small amounts.

With installment loans, you repay the money plus interest and fees over a set period. Each payment includes both principal (original amount borrowed) and interest. Most have fixed interest rates, so your payments will be for equal amounts.

Lenders offering second chance loans typically focus less on credit. Instead, they emphasize income, employment status, and recent financial behavior. The point of last chance loans is that you can get funds without good credit, a co-signer, or collateral. Though, some second chance loans are secured.

If your bank turns you down, try looking for second chance loans near me that offer flexible approval criteria. While some lenders advertise bad credit loans with guaranteed approval, they rarely truly guarantee approval. That said, these loans have more flexible requirements than conventional loans.

Borrowers can usually apply for second chance loans online. Online lenders often make quick decisions and provide rapid funding within a day or two.

The catch with second chance loans is that annual percentage rates (APRs) tend to be high to offset the lender’s risk. Have a repayment plan in place before you take out a loan. A second chance loan can help you regain financial stability if used wisely.

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Types of second chance loans for bad credit

When your credit score makes it tough to qualify for traditional financing, 2nd chance loans for bad credit can offer a path forward. Not all second chance loans are created the same. You need to find one that best aligns with your situation and repayment abilities. Here’s a breakdown of the most common types of loans:

Second chance car loans

If you’re wondering how to get a car loan with bad credit, second chance auto financing may be your best route. Lenders or dealerships specializing in second chance auto loans for bad credit offer these loans. They are good for borrowers with low credit scores or a history of repossession. Approval depends more on your income, down payment, and employment than on your credit.

Second chance auto loans are an example of secured installment loans. In this case, your car serves as collateral.

You may also find car repair financing options if you’re trying to keep your current vehicle on the road. These will likely be unsecured installment loans for smaller amounts.

Emergency installment loans

Emergency installment loans are ideal for covering urgent expenses like medical bills or rent. Many lenders offer quick online applications with relaxed credit standards. Same-day emergency loans can be a go-to option when time is tight. Apply in the morning, and you should be able to receive your funds by the end of the day.

Short-term loans with no credit check

Short-term loans are personal loans you repay over six months to three years. They are typically for smaller amounts of money.

Many lenders advertise second chance loans with no credit check, appealing to borrowers with severely damaged credit. No credit check loans sound good, but they come with higher rates to offset the lender’s risk. Use them cautiously and only when absolutely necessary.

Second chance payday loans

Last chance payday loans are fast, small-dollar options that provide immediate funds to hold you over until your next paycheck. You typically repay these loans within one or two weeks. Some lenders offer longer-term installment options that spread out your payments. For small, urgent expenses, $255 payday loans online same day are one of the most accessible short-term loan options.

Payday lenders generally assess your income and do not check your credit. They are the closest to second chance loans with guaranteed approval out there.

Since they do not check your score, payday lenders tend to charge extremely high fees. They can be equivalent to a triple-digit APRs. Rolling over the loan can lead to more fees and a cycle of debt.

Bad credit personal loans

Second chance personal loans are typically unsecured installment loans with flexible approval requirements. They tend to have quick approval processes and fixed monthly payments. Lenders emphasize your income and current debt levels more than your credit score.

Credit unions and online lenders often provide second chance installment loans for bad credit. Always read the fine print to understand the full cost of borrowing. Personal loans for bad credit are usually more expensive since the lenders will charge a higher APR.

Take the time to compare options and borrow only what you can afford to repay.

Pros and cons of second chance loans

Pros:

Quick funding
Chance to build credit
Easily apply online
Fast approval process
Flexible repayment plans
Versatile loans
Suitable for bad credit

Cons:

Interest rates and fees are high
Debt-trap
No guaranteed approval
More debt can worsen your financial situation

When to use second chance loans

Second chance loans are best used for urgent financial needs when you have bad or no credit. They can provide a short-term solution for emergencies, but are not helpful with long-term financial problems. Use them for:

Unexpected medical bills. Out-of-pocket costs can be overwhelming

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Emergency car repairs. Car breakdowns are expensive, and not everyone has the cash to cover them.

Cover rent or mortgage payments to avoid eviction or defaulting on your loan.

Pay utility bills so the provider does not shut off your heat, electricity, or water.

Other financial emergencies, such as a broken appliance or urgent travel.

Do not use second chance loans for non-essential expenses like taking a vacation or paying for a wedding. You also should not use them if cheaper financing options are available.

If you’re researching how to pay off $20,000 in credit card debt and have bad credit, second chance loans may be appealing. Debt consolidation is a popular method for paying off debt. The problem with second chance loans is that your interest rates will likely be too high to save money.

Pay debts wisely!

Or your credit score may suffer.

How to get second chance loans online

You can easily get approved for a second chance loan online.

Check your credit report

Before applying, check your credit score. Knowing where you stand gives you a better idea of which lenders will most likely approve your application. Credit scores range from 300-850, with higher scores ranking better.

800-850: Excellent

740-799: Very good

670-739: Good

699-580: Fair

300-579: Poor

Second chance loans can provide funding to borrowers with poor credit. Bringing your score even slightly higher into the fair range could help you qualify for better rates.

While you’re at it, review your credit report for errors or outdated information. Inaccurate negative marks could be dragging down your score. If you find any mistakes, dispute them with the issuing bureau.

Find reputable direct lenders

A second chance loan direct lender often offers faster funding than going through a broker. Direct lenders work with borrowers every step of the way. They review, approve, and fund the loans. No third parties or brokers are involved, lowering the risk of the lender sharing your information with others.

Direct lenders are often online lenders. Applying for the loan online typically streamlines the process and makes same-day funding possible. Applications are usually fast; you’ll receive the money as a direct deposit and can repay the funds online.

Stick with lenders that have good reviews, clear terms, and secure application portals.

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Compare rates and terms

Not all second chance loans are created equal. Be cautious of any loan that claims “guaranteed approval” or doesn’t disclose full cost details upfront.

Take time to prequalify with multiple lenders. Then compare the APRs, repayment terms, and loan amounts. Check for extra fees like an origination fee or prepayment penalty.

Choose a loan with the shortest repayment period and the highest monthly payment you can afford. Generally, loans with longer repayment terms and low monthly payments cost more overall interest.

If you want to use the loan to rebuild credit, check that the lender reports to all three major credit bureaus. Only then will borrowing and repaying on time impact your score.

Complete the online application

When you apply, you will likely need proof of income, a government-issued ID, and bank account details. Lenders may also ask for your pay schedule, income, and current debt load. These details help them understand your cash flow and whether you can afford to repay the money.

Most applications take just minutes to complete. Some lenders offer instant decisions, while others take a few business days.

If approved, review your loan agreement and verify the details. After you sign, the lender will deposit the funds in your bank account.

Frequently asked questions

1. Can I get another loan if I already have one?

You can get another loan even if you already have one, but approval depends on your credit score, income, and current debt load. Lenders will evaluate your ability to repay both loans. If your debt-to-income ratio is too high or your credit is low, it will be harder to get another loan.

2. Why do I keep getting denied loans?

Loan denials often happen because of low credit scores, high debt levels, insufficient income, or recent delinquencies. Lenders also check your employment history and may require you to be at your current job for some time.

3. How long should you wait to get a second loan?

There’s no set waiting period to apply for a second loan. A general rule of thumb is to wait at least six months between applications. The waiting period will give your score time to recover from the hard inquiry. Also, holding off until your financial situation improves or your credit score increases is best.

4. Is it a good idea to get a loan to pay off another loan?

Debt consolidation with a loan can be a good idea. For it to work, the new loan should have better terms, like a lower interest rate or a longer repayment period. Make sure you can afford to pay off the loan. Using one loan to repay another without addressing the underlying financial habits can lead to more debt.

Bottom line

Second chance loans are a tempting solution when facing a financial emergency. You get fast access to cash with flexible approval requirements. Certain loans will help you rebuild your credit when you make payments on time, so you can secure better financing in the future

Treat second chance loans as a last resort when all other options have failed. They come with higher interest rates and fees that can make them difficult to repay and worsen your financial situation.

Before you borrow, make sure you truly need the money. Find reputable lenders and prequalify to get the best offer. Lastly, only borrow if you can realistically afford to repay the debt.

1. Paycheck Advance is For eligible customers only. Your actual available Paycheck Advance amount will be displayed to you in the mobile app and may change from time to time. Conditions and eligibility may vary and are subject to change at any time, at the sole discretion of Finco Advance LLC, which offers this optional feature. Finco Advance LLC is a financial technology company, not a bank. Expedited disbursement of your Paycheck Advance is an optional feature that is subject to an Instant Access Fee and may not be available to all users. Expedited disbursements may take up to an hour. For more information, please refer to Paycheck Advance Terms and Conditions.

2. Paycheck Advance is an earned wage access service and is not a loan or credit product.

3. Current is a financial technology company, not an FDIC-insured bank. FDIC insurance up to $250,000 only covers the failure of an FDIC-insured bank. Certain conditions must be satisfied for pass-through deposit insurance coverage to apply. Banking services provided by Choice Financial Group, Member FDIC, and/or Cross River Bank, Member FDIC. The Current Visa® Debit Card, which may be issued by Choice Financial Group and/or Cross River Bank, and the Current Visa® secured charge card, which is issued by Cross River Bank, are all issued pursuant to licenses from Visa U.S.A. Inc. and may be used everywhere Visa debit or credit cards are accepted. A Current debit account is required to apply for the Current Visa® secured charge card. Independent approval required.

4. Faster access to funds is based on comparison of traditional banking policies and deposit of paper checks from employers and government agencies versus deposits made electronically. Direct deposit and earlier availability of funds is subject to timing of payer’s submission of deposits.

5. Debit card: Fees may apply, including out of network cash withdrawal fees, third-party fees, cash load fees, inactivity fees, account closure fees, international transaction fees, replacement card fees, express mail fees and escheatment fees. Build Card: Some fees may apply, including out of network ATM fees of $2.50 per transaction, late payment fees of 3% of any total due balance outstanding and past due for two or more billing cycles, foreign transaction fees of 3% of the full transaction amount (minimum $0.50), card replacement fees per card of $5 for regular delivery and $30 for expedited delivery, cash deposit fees of $3.50 per deposit, and third party processing fees.

6. The Current Visa® Debit Card is issued by Choice Financial Group pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit cards are accepted. The Current Visa® secured charge card is issued by Cross River Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa credit cards are accepted. Please see the back of your Card for its issuing bank. Current Individual Account required to apply for the Current Visa® secured charge card. Independent approval required.

7. Individual results may vary. Using your credit card responsibly may allow you to improve your credit score. Credit building depends on various factors, including your payment history, credit utilization, length of credit history, and other financial activities.

8. Faster access to funds is based on comparison of traditional banking policies and deposit of paper checks from employers and government agencies versus deposits made electronically. Direct deposit and earlier availability of funds is subject to timing of payer’s submission of deposits.

9. Funds held in Savings Pods are FDIC-insured on a pass-through basis up to $250,000 at our partner bank Choice Financial Group, member FDIC.

10. Actual overdraft amount may vary and is subject to change at any time, at Current’s sole discretion. In order to qualify and enroll in the Fee-Free Overdraft feature, you must receive $500 or more in Eligible Direct Deposits into your Current Account over the preceding 35-day period and fulfill other requirements subject to Current’s discretion. Negative balances must be repaid within 60 days of the first Eligible Transaction that caused the negative balance. For more information, please refer to Fee-free Overdraft Terms and Conditions. Individual Current Accounts only.

11. For eligible customers only. You may earn Points in connection with your Build Card purchases at retailers whose merchant code is classified as: Dining (e.g., restaurants) and Groceries (e.g., supermarkets) and by completing other actions that Current designates as subject to the Current Points Program. The amount of Points granted for different actions as well as the purchase requirements necessary to earn Points will vary, and is subject to Current’s sole discretion. After qualifying, please allow 3-5 business days for points to post to your Current account. Points will expire 365 days after they settle. For more information (including specific eligibility criteria), please refer to the Current Points Terms and Condition.

12. Some fees may apply, including out of network ATM fees of $2.50 per transaction, late payment fees of 3% of any total due balance outstanding and past due for two or more billing cycles, foreign transaction fees of 3% of the full transaction amount (minimum $0.50), card replacement fees per card of $5 for regular delivery and $30 for expedited delivery, cash deposit fees of $3.50 per deposit, and third party processing fees.

13. Boost Bonuses are credited to your Savings Pods within 48 hours of enabling the Boost feature and on a daily basis thereafter, provided that the Savings Pod has accrued a Boost Bonus of at least $0.01. No minimum balance required. The Boost rate on Savings Pods is variable and may change at any time. The disclosed rate is effective as of August 1, 2023. Must have $0.01 in Savings Pods to earn a Boost rate of either 0.25% or 4.00% annually on the portion of balances up to $2000 per Savings Pod, up to $6000 total. The remaining balance earns 0.00%. To earn a Boost rate of 4.00%, the sum of your Eligible Payroll Deposits over a rolling 35-day period must be $500 or more, with at least one Eligible Payroll Deposit equalling a minimum of $200. For more information, please refer to Current Boost Terms and Conditions.

14. Your money is FDIC-insured on a pass-through basis up to $250,000 at each of our partner banks, Choice Financial Group and Cross River Bank, members FDIC.

15. Average value based on Fine Hotels + Resorts bookings in 2023 for stays of two nights. Benefits include daily breakfast for two, room upgrade upon arrival when available, $100 amenity, guaranteed 4PM late checkout, and noon check-in when available. Certain room categories not eligible for upgrade. $100 amenity varies by property. Actual value will vary based on property, room rate, upgrade availability, and use of benefits.

16. Up to $500 per Covered Trip that is delayed for more than 6 hours; and 2 claims per Eligible Card per 12 consecutive month period. Eligibility and Benefit level varies by Card. Terms, Conditions, and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by New Hampshire Insurance Company, an AIG Company.

17. The maximum benefit amount for Trip Cancellation and Interruption Insurance is $10,000 per Covered Trip and $20,000 per Eligible Card per 12 consecutive month period. Eligibility and Benefit level varies by Card. Terms, Conditions, and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by New Hampshire Insurance Company, an AIG Company.

18. Baggage Insurance Plan coverage can be in effect for Covered Persons for eligible lost, damaged, or stolen Baggage during their travel on a Common Carrier Vehicle (e.g. plane, train, ship, or bus) when the Entire Fare for a ticket for the trip (one- way or round-trip) is charged to an Eligible Card. Coverage can be provided for up to $2,000 for checked Baggage and up to a combined maximum of $3,000 for checked and carry-on baggage, in excess of coverage provided by the Common Carrier. The coverage is also subject to a $3,000 aggregate limit per Covered Trip. For New York State residents, there is a $2,000 per bag/suitcase limit for each Covered Person with a $10,000 aggregate maximum for all Covered Persons per Covered Trip. Eligibility and Benefit level varies by Card. Terms, Conditions, and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by AMEX Assurance Company.

19. Car Rental Loss and Damage Insurance can provide coverage up to $75,000 for theft of or damage to most rental vehicles when you use your eligible Card to reserve and pay for the entire eligible vehicle rental and decline the collision damage waiver or similar option offered by the Commercial Car Rental Company. This product provides secondary coverage and does not include liability coverage. Not all vehicle types or rentals are covered. Geographic restrictions apply. Eligibility and Benefit level varies by Card. Terms, Conditions, and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by AMEX Assurance Company. Car Rental Loss or Damage Coverage is offered through American Express Travel Related Services Company, Inc.

20. Coverage for a Stolen or damaged Eligible Cellular Wireless Telephone is subject to the terms, conditions, exclusions, and limits of liability of this benefit. The maximum liability is $800, per claim, per Eligible Card Account. Each claim is subject to a $50 deductible. Coverage is limited to two (2) claims per Eligible Card Account per 12 month period. Eligibility and Benefit level varies by Card. Terms, Conditions, and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by New Hampshire Insurance Company, an AIG Company.

21. When an American Express® Card Member charges a Covered Purchase to an Eligible Card, Extended Warranty§ can provide up to one extra year added to the Original Manufacturer’s Warranty. Applies to warranties of five (5) years or less. Coverage is up to the actual amount charged to your Card for the item up to a maximum of $10,000; not to exceed $50,000 per Card Member account per calendar year. Eligibility and Benefit level varies by Card. Terms, Conditions, and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by AMEX Assurance Company.

22. Purchase Protection is an embedded benefit of your Card Membership and requires no enrollment. It can help protect Covered Purchases made on your Eligible Card when they’re accidentally damaged, stolen, or lost, for up to 90 days from the Covered Purchase date. The coverage is limited to up to $10,000 per occurrence, up to $50,000 per Card Member account per calendar year. Coverage Limits Apply. Eligibility and Benefit level varies by Card. Terms, Conditions, and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by AMEX Assurance Company.

23. Chime is a financial technology company, not a bank. Banking services provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC.

24. The secured Chime Credit Builder Visa® Card is issued by Stride Bank, N.A., Member FDIC, pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa credit cards are accepted.

25. Banking services and debit card provided by The Bancorp Bank N.A. or Stride Bank, N.A., Members FDIC, pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit cards are accepted.

26. The Annual Percentage Yield (“APY”) for the Chime Savings Account is variable and may change at any time. The disclosed APY is effective as of September 20, 2023. No minimum balance required. Must have $0.01 in savings to earn interest.

27. There’s no fee for the Chime Savings Account. Cash withdrawal and Third-party fees may apply to Chime Checking Accounts. You must have a Chime Checking Account to open a Chime Savings Account.

28. To apply for Credit Builder, you must have received a single qualifying direct deposit of $200 or more to your Chime Checking Account. The qualifying direct deposit must be from your employer, payroll provider, gig economy payer, or benefits payer by Automated Clearing House (ACH) deposit OR Original Credit Transaction (OCT). Bank ACH transfers, Pay Anyone transfers, verification or trial deposits from financial institutions, peer to peer transfers from services such as PayPal, Cash App, or Venmo, mobile check deposits, cash loads or deposits, one-time direct deposits, such as tax refunds and other similar transactions, and any deposit to which Chime deems to not be a qualifying direct deposit are not qualifying direct deposits.

29. Money added to Credit Builder will be held in a secured account as collateral for your Credit Builder Visa card, which means you can spend up to this amount on your card. This is money you can use to pay off your charges at the end of every month.

30. Based on a representative study conducted by Experian®, members who made their first purchase with Credit Builder between June 2020 and October 2020 observed an average FICO® Score 8 increase of 30 points after approximately 8 months. On-time payment history can have a positive impact on your credit score. Late payment may negatively impact your credit score.

31. On-time payment history may have a positive impact on your credit score. Late payment may negatively impact your credit score. Chime will report your activities to Transunion®, Experian®, and Equifax®. Impact on your credit may vary, as Credit scores are independently determined by credit bureaus based on a number of factors including the financial decisions you make with other financial services organizations.

32. Early access to direct deposit funds depends on the timing of the submission of the payment file from the payer. We generally make these funds available on the day the payment file is received, which may be up to 2 days earlier than the scheduled payment date.

33. SpotMe® on Debit is an optional, no fee overdraft service attached to your Chime Checking Account. To qualify for the SpotMe on Debit service, you must receive $200 or more in qualifying direct deposits to your Chime Checking Account each month and have activated your Visa debit card. Qualifying members will be allowed to overdraw their Chime Checking Account for up to $20 on debit card purchases and cash withdrawals initially but may later be eligible for a higher limit of up to $200 or more based on Chime Account history, direct deposit frequency and amount, spending activity and other risk-based factors. The SpotMe on Debit limit will be displayed within the Chime mobile app and is subject to change at any time, at Chime’s sole discretion. Although Chime does not charge any overdraft fees for SpotMe on Debit, there may be out-of-network or third-party fees associated with ATM transactions. SpotMe on Debit will not cover any non-debit card transactions, including ACH transfers, Pay Anyone transfers, or Chime Checkbook transactions. SpotMe on Debit Terms and Conditions.

34. Tipping or not tipping has no impact on your eligibility for SpotMe®.

35. Out-of-network ATM withdrawal fees may apply except at MoneyPass ATMs in a 7-Eleven, or any Allpoint or Visa Plus Alliance ATM.

36. Save When I Get Paid automatically transfers 10% of your direct deposits of $500 or more from your Checking Account into your savings account.

37. Round Ups automatically round up debit card purchases to the nearest dollar and transfer the round up from your Chime Checking Account to your savings account.

38. Mobile Check Deposit eligibility is determined by Chime in its sole discretion and may be granted based on various factors including, but not limited to, a member’s direct deposit enrollment status.

39. Funds are automatically debited from your Checking Account and typically deposited into the recipient’s Checking Account within seconds. Pay Anyone transactions will be monitored and may be held, delayed or blocked if the transfer could result in fraud or another form of financial harm. Sometimes instant transfers can be delayed.

40. Pay Anyone transactions will be monitored and may be held, delayed or blocked if the transfer could result in fraud or another form of financial harm. Sometimes instant transfers can be delayed. Non-Chime members must use a valid debit card to claim funds.

41. Not affiliated with Empower Annuity Insurance Company of America (www.empower.com). Not everyone will qualify. Offers range from $10-$300 for first-time customers; $10-$400 for all others. Offers are based on our eligibility requirements and can go up with on-time payments. In Feb 2025, the average offer was $95 for first-time customers; $187 for all others. Instant delivery is optional—see fees in Empower’s Terms. Empower offers a 14-day trial for first-time customers followed by an auto-recurring $8/month subscription fee. Cancel anytime.

* EarnIn is not available for Connecticut residents

Rachel Alulis

Rachel Alulis has been the lead editor for Moneyfor's credit cards team since 2015 and for the financial rewards team since 2023. Before joining Moneyfor, Rachel worked at USA Today and the Des Moines Register. She then established a successful freelance writing and editing business specializing in personal finance. Rachel holds a bachelor's degree in journalism and an MBA.

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How to Get Second Chance Loans with Bad Credit

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