Being stuck with expensive automotive repairs is never fun, but these days, many people are opting to repair their old cars rather than go to a car dealer and buy a new one. It makes sense to hold onto an older vehicle, but what should you do if you need a repair that isn’t covered by insurance or a warranty? Let’s explore some options.
Are There Auto Repair Loans?
An auto repair loan isn’t a specific category, but it may be used to describe personal installment loans used for auto repair costs. A credit card with a low APR can also function as an auto repair loan. A personal loan is a common option for dealing with an expensive auto repair. Banks and credit unions are usually the starting point for looking at a personal loan. Additionally, many local car dealers offer service financing options worth exploring.
Another option is to take out a payday loan. These loans usually range between $200 and $1,000 and are paid back within one to six months. Payday loans do have some risks as fees can be huge and the lender may charge additional fees if you don’t pay on time.
An even riskier way to borrow money is to use a title loan. This means the lender grants the loan in return for your car title. You can get the title back after you repay the loan and any fees. If you don’t pay, the lender can take your vehicle or add more fees. As many as one in five borrowers using this method end up having their vehicle repossessed.
Using a Credit Card for Auto Repairs
If you need more than the above options, you might consider using a card that’s already in your wallet if you have the available credit. The main thing to consider is the APR on your card. For example, if your APR is 15% and you pay $25 per month on a $1,000 repair, it could cost you nearly $400 in interest and take nearly five years to pay off.
For that reason, it’s best not to use a credit card unless you can comfortably afford to pay it off in only a few billing cycles, thus limiting the interest that can accrue. Another credit card option is to use a new card with a low or 0% intro APR. Sometimes, this can be as much as 21 months. The important thing here is to pay it off within the intro period, otherwise whatever is left will have interest added to it.
A similar option is to use a credit card from a branded auto shop. For example, Synchrony has a Car Care card that partners with several major auto repair chains like NAPA, Discount Tire, and Midas.
Auto Repair Loans FAQ
Can you shop for auto repair loans and not hurt your credit? The best way is to get pre-qualified with a soft credit pull. Not all lenders have this option, however. The other way is simply to use a line of credit that you already have. If you secure a personal loan, you can generally use it on whatever you want.
A final option you might consider is asking the auto repair shop if they have any financing options. It’s possible that some will, but you may need to put down an advance payment, and they likely won’t offer a long payoff period.
This post may contain affiliate links. Meaning a commission is given should you decide to make a purchase through these links, at no cost to you. All products shown are researched and tested to give an accurate review for you.
