In 2019, the average car repair came out at $384.90 in the United States. Not everyone can afford that amount of money at short notice, and it’s not like you always know when you might suddenly need a car repair.
In those cases when you’re short on money, but can’t afford to leave your car not working, you might need to take out an auto repair loan. There is a variety of ways to get the money quickly and cheaply, depending on your circumstances. Read on to see which option can help you.
Get a Personal Auto Repair Loan
A personal loan can be useful if you’ve got a good credit score and can get good rates on a loan. You can then pay back the amount you’ve borrowed over time, according to the agreed terms. There are three different types of loans, each with its own risks and advantages.
Traditional Loans
The simplest loan you can get to cover auto maintenance costs is a traditional personal loan. You can shop around for competitive rates, but make sure you pay attention to the small print. If an interest rate sounds too good to be true, make sure there are no hidden charges that could catch you out.
Traditional loans will likely have the most choice for longer payment dates. However, you will likely need a strong credit history to qualify for one.
Payday Loans
Payday loans are short-term loans that come with high risk. They most often require a post-dated check or automatic transfer, to make sure that you will pay back the full amount on time.
Be wary, as the fees can be very high, reaching up to 400% APR. Additional fees will likely apply if you miss your payment date, so be careful about taking out a payday loan unless you’re confident you can pay the money back.
Title Loans
When it comes to car repair financing, there is a specific kind of loan that can help: car title loans. Much like a payday loan, car title loans are short-term loans that also come with high risk.
Although title loans can help you to pay your car maintenance costs in the meantime, the risk if you can’t pay back the loan on time is that they will repossess your car or force you to pay rollover fees to extend the loan. This is an incredibly risky and potentially expensive type of loan to take out.
Research Mechanics in Advance
Auto repair financing can be expensive, but there are also ways to try and reduce the costs as much as possible. Shop around to find the right mechanic for you, perhaps one that offers in-house financing options or cheaper options than their competitors.
Search for ‘car mechanic nearby’ and make a shortlist of the most affordable options. When it comes to finding a mechanic, you can save a lot of money by investing some time into research early on.
Some Final Thoughts
When choosing one of these options for an auto repair loan, be sure to do plenty of research. You might be tempted to rush and get your car fixed as soon as possible, but you can often save yourself a lot of money by slowing down and taking your time on making a decision.
If you’re keen to learn more about finances and loans, take a look at other articles in our finance section.
