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There Are Many Options For Car Repair Financing

Not Everyone Is Struggling To Pay For An Urgent Car Repair.

If you need car repair financing for an emergency that is not covered by your insurance, there are many options. Let’s compare the pros and cons of each option.

AAA’s survey found that maintaining and repairing a car can run an average of $1200 per year. Only one-third of U.S. drivers have enough money to cover unexpected repairs.

Auto Repair Financing Using a Personal Loan

A personal loan is another option. This will enable you to obtain the funds you need to fix your car. Depending on your approval by the lender, funds may be transferred to your checking account within 24 hours. These loans are installment loans. 

Lenders will offer you monthly payments to pay back the money over time. There may be interest and fees. They can vary depending upon the lender.

Your credit history could impact your ability to obtain a personal loan. The terms and interest rates you receive will be affected if you are approved for the loan.

Although you may be eligible to receive a car repair financing, the terms and interest rate offered will not suit your needs. The cosigner will give the lender assurance that the debt will not be repaid.

These are the best places to get a personal loan. Let’s see how they compare.

Traditional Loans : Car Repair Financing Loans

Banks and credit unions are a good place for personal loans if you’re ready to compare rates. Online lenders can compare terms among personal loan lenders for auto repairs financing to find the best words.

You should review the terms of your loan before you apply for money at any financial institution.

  • Principal: This represents the principal amount that you borrowed, less interest and fees.
  • Fee’s: additional costs can include application fees and late fees.
  • Interest Rate: The amount you borrow money to pay is expressed as a percentage. These rates do not include any fees or other charges associated with borrowing money.
  • Annual percentage rates: The yearly cost of borrowing. This includes borrowing fees, which are usually higher than your interest rate.
  • The repayment term: This describes the time you have to repay your loan. It is often expressed in months.

Tip: You may be able to get auto repair financing through payday lenders. Contact your credit union to learn more about alternative loans. The loans can be obtained in amounts between $200 and $1,000. These loans can be repaid in one to six months with a 28% interest rate limit.

Payday Loans

Check-advance loans also called cash advance loans and check-advance loans. The lender will require a postdated check or permission to take funds from your bank account. Your next payday may bring you the total amount of the loan and any fees.

There are risks and limitations to borrowing against your future salary. In some states, payday loans are not allowed. A maximum amount that can be borrowed may be restricted to a specific amount. Fees can reach up to 400%, even for small amounts.

 Additional fees may be charged if your account does not have enough funds at the time of the payment or if the loan is extended.

Title loans

Title loans are short-term, risky financing options. If you are approved for a vehicle title loan, the lender will lend you money in exchange for your car’s name. After paying the fees and amount of the loan, you can get your car’s title back. This usually takes less than 30 days.

You will be charged vehicle repossession or rollover fees if you default on loan payments. This allows you the option to defer your loan repayments.

This is a risky way to borrow money. The average APR for a car title loan is 300%. The Consumer Financial Protection Bureau found more than two-thirds of auto title loan borrowers had their payments rolled over six consecutive times due to difficulties in repaying high-interest rates. 

According to the CFPB, 1/5 borrowers lose their vehicles because they are unable to repay the debt.

Auto Repair Financing With a Credit Card

A credit card is a quick and easy way for some to pay for an emergency repair. These are just some of the options before you decide to use plastic.

Existing Cards In Your Wallet

A credit-card credit card could cost you a lot to repair your car. A $1,000 repair at 15% APR would require 56 months and a $25 monthly repayment. This could result in nearly $395 in interest. The repair would take 67 months and would cost you $662 in interest at 20%.

We recommend that only existing credit cards be used for purchases you can afford to pay in full within one billing cycle.

A New Card That Offers a Low Initial APR

While using an existing credit card can lead to high interest rates and costly auto repairs, there are other ways to get credit cards. High-interest rates can be avoided by using credit cards that offer introductory or 0% purchase APRs.

 You can avoid interest fees for purchases made within the initial period after account opening. The introductory period typically lasts between 12 to 21 months. After the intro period, your card will be charged an annual percentage rate (APR). Any balance not paid by the end of the intro period will have the APR applied.

A credit card is a great way to finance your car repairs if you qualify for a card with an intro rate of 0% and can pay all your auto repair costs in full before the intro period ends.

Branded Cards From Your Auto Supply Store

Many mechanics and auto parts shops offer financing options via branded credit cards.

Synchrony has partnered up with many major auto repair chains, including Midas Auto Parts and NAPA Automotive Parts. Customers can apply for a credit card with a co-branded logo for repairs, maintenance, or other expenses.

Napa AutoCare offers customers, such as a NAPA EasyPay credit card via Synchrony. The card comes with a few perks and no annual fees.

Bottom Line

Comparison shopping does not only help you find the lowest price on jeans or the best kitchen appliance. Comparing shopping can help you find auto repair financing.

Before you apply for a loan or credit card to finance your car repair, compare quotes. Ask mechanics for pricing information before you bring your vehicle in. A written estimate might be helpful as well.

Once you’ve decided where to fix your home, it is time to compare loan offers to ensure you get the best deal.

Do not fall for the same trap. Instead, create an emergency fund to cover your financial future.

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auto repair loans
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loan amount
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depending on the lender
interest charges
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