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If you need to repair or replace your car and don’t have the cash, you can use credit to cover costs. Read on to learn more about auto repair loans for bad credit and compare options to find the best deal.
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Secured Loans
Car repair loans for bad credit allow you to borrow money to cover unexpected vehicle repairs. You can get them from a traditional lender, a credit union or an online marketplace. You can also use a credit card as a car repair financing solution, though that may result in higher interest rates than a personal loan.
When choosing a lender, shop around to find one with the best terms. Consider the maximum loan amount, interest rates and fees. You can also compare options by looking at reviews and ratings to see if a lender is reputable. You should apply for a loan only when you’re certain you have a plan to repay it on time, and when you’ve exhausted cheaper alternatives like using your emergency savings or charging the repairs to a credit card.
Credit unions often have lower maximum loan amounts and fees than banks, and they can offer competitive interest rates for borrowers with bruised credit. You can also check out online lenders, which offer more flexibility in their eligibility criteria and typically deposit funds in your bank account sooner than a brick-and-mortar bank. Some of these lenders also report your payments to the credit bureaus, which can help you build a positive financial history and improve your chances of qualifying for more favorable loan terms in the future.
Lines of Credit
Mechanics and auto repair shops often work with lenders to offer in-house financing, which can help ease the burden of paying the money shop loan for costly car repairs. This financing can take the form of a payment plan or even a branded credit card, which offers special promotions and discounts as well as low or no interest for a certain amount of time. However, these types of loans typically have higher interest rates than personal loans.
Another option is a revolving line of credit, which provides access to a pool of funds you can borrow against as needed, and repay in a set period. These lines of credit are usually tied to an existing bank account, and they can be used to finance a variety of expenses, including car repairs.
Another financing option is an installment loan, which borrowers pay back through fixed monthly payments. These loans can be used to pay for any expense, and borrowers may qualify for them with a range of credit scores. Borrowers with the best chances of qualifying for an installment loan typically have excellent credit (scores of 690 or above). Other options for financing car repairs include payday loans, title pawn loans and auto repair credit cards. If you have bad credit, it’s a good idea to shop around and compare multiple lenders before choosing one.
Personal Loans
If your car needs repairs and you don’t have any cash saved, a personal loan for auto repair may be the best option. You can apply for one online in minutes, and the advanced algorithms will take a broader look at your finances to make sure you get an offer tailored to your unique situation.
Personal loans for car repair are available from banks, credit unions and online lenders. Several lenders offer low minimum loan amounts, and some don’t charge origination fees or late fees. Some lenders also offer a discount for existing bank account customers.
Other options for financing car repairs with bad credit include payday or title loans, which require you to hand over your vehicle’s title until you pay back the loan plus fees. These types of loans often carry high interest rates, so they are best avoided.
Another option is a secured personal loan, which you can get from companies such as Oportun or LendingPoint. With a secured loan, you can borrow up to your home equity, but you’ll need to provide the lender with some form of security, such as an asset or home equity line of credit. A secured loan requires a full credit check and typically has lower interest rates than unsecured loans, but you’ll have to meet minimum credit score requirements to qualify.
Credit Cards
Credit cards offer a flexible option to finance car repairs when you don’t have the money to pay for them upfront. You can use a card with a 0% introductory purchase APR to pay for repairs and avoid interest charges for several months, or you can charge the cost of a new set of tires, or a rental car while yours is in the shop, and then pay off the debt over time.
Depending on the card you choose, you may be able to earn points and rewards, which can help offset the costs of your car repairs or reduce the amount you have to borrow. However, if you’re using the same card for all your expenses, keeping track of what you spend could be a challenge.
Some mechanics and auto parts stores partner with lenders that issue credit cards to provide financing options for their customers. For example, Midas and NAPA Auto Parts have co-branded credit cards that allow you to finance repair and maintenance charges. These credit cards typically have generous credit limits and are easy to get approved for, as well.
A personal loan from an online lender can also be a good alternative to a credit card for car repairs, particularly if you have bruised credit and don’t want to take out a second loan. NetCredit, for example, offers an unsecured personal loan for those with bad credit that you can apply for in minutes. If you’re approved, funds can arrive in your account as soon as the next business day.
