Let’s face it, owning a car is sweet until expensive repairs come knocking. If you’re dealing with an emergency car repair but don’t have the cash to fund the repairs, it’s time to consider auto repair loans. However, if you don’t have great credit, it could be harder to get a personal loan from a bank. When this happens, you might be wondering where you can access an affordable auto repair loanswith bad credit. Read on to learn everything you need to know about how and where to get car repair loans, even if you have bad credit.
What Are Auto Repair Loans?
A car repair loan is a short-term credit specially designed to help car owners afford their repairs. It’s a form of emergency auto financing that allows you to borrow money and cater to your needs. Loan terms, interests, amount, and repayment plans vary from lender to lender.
In most cases, auto insurance plans do not provide coverage for the wear and tear of your car. Major repairs are expensive and can catch many people off guard. With no money to finance the repairs, borrowing may be your only option, especially if you don’t have an alternative car to meet your commuting needs. Your loan request can be processed in under 24 hours or within weeks, depending on your lender.
Auto Repair Loan With Bad Credit
When your car breaks down and you don’t have money to fix it, borrowing money can help you pay for necessary replacement parts and repairs. Having good credit gives you access to various lenders. The problem comes when you have a less-than-perfect credit score. With poor credit, chances of getting a loan from traditional lenders, like banks, are slim.
Luckily, some lenders have generous prequalification requirements for those with poor credit. This means you can still borrow money to repair your car even if your credit history isn’t perfect. To qualify for an auto repair loan with bad credit, most lenders require you to provide:
- Proof of income
- A list of existing debts (if any)
- Credit history
Lenders will use this information to calculate your APR and fees. Borrowers with bad credit typically qualify for high-interest loans. Still, you need to shop around to ensure you get the best deal for your situation.
How Does an Auto Repair Loan Work?
Whether your car needs a new suspension or tires, a car repair loan is helpful when you can’t afford expensive repairs. These loans work like the typical auto loan, where you pay off the amount in monthly installments. The difference is that you typically don’t need to make a down payment. Different types of auto repair loans come with different term lengths, APR rates, and fees. For example, payday loans may require you to repay the entire amount plus interests and fees in a week, while a personal loan gives you a chance to repay the amount owed over time.
Where To Get Auto Repair Loans for Bad Credit
If you’re experiencing difficulty getting approved for ordinary loans from banks, some lenders specialize in providing car repair loans for people with bad credit. Lending products from such lenders are unsecured, meaning you don’t have to provide collateral to be approved for a line of credit. Here are some of the best places where you can borrow money to repair your car:
Some mechanic shops provide good financing options tailored to meet the needs of those who have bad credit. This is popular with large mechanics that have chains of auto shops across various regions. These shops often collaborate with lenders to provide loans. In most instances, the lender will pay the mechanic directly. Other times, lenders can give you a credit card to pay off repair costs. This option is great because most mechanic shops provide a zero-interest payment plan.
You can use personal loans for almost anything, and you can repay them in monthly installments over time. The benefits of these loans include fixed interest rates, affordable monthly payments, and no prepayment fees. Some lenders specialize in providing personal loans for people with poor credit. Find such lenders and remember to repay your auto repair personal loan on time to help improve your credit score.
You can also finance your car repair with a title loan, but this isn’t always the best option. Auto title loans or fast loans allow you to exchange your car title for a loan. While you can use the money to finance things other than fixing your car, title loans are prohibitively expensive as they come with high APR rates and are repaid over a very short period. Worse still, you can lose your car if you don’t repay the loan.
Like auto title loans, most lenders providing payday loans don’t do a credit check to give you an auto repair loan. Payday lenders offer loans based on a borrower’s ability to repay. As long as you showcase a reliable stream of income, a lender will approve you for a payday loan quickly. However, these loans come with high interest rates and very short repayment periods. Payday loans are not recommended as you can suffer hefty penalty fees if you default them.
Some people may confuse personal loans with payday loans. While the latter comes with hefty interests, a single repayment date, and high fees, personal auto repair loans come with flexible and affordable monthly installments.
Unsecured Credit Cards
Some credit card companies have special plans for people with low credit scores. Explore various lenders and identify those that offer zero percent and low introductory APR. With such credit cards, you can avoid interest fees on your auto repair loan over the introductory period. Work hard to pay it off within the intro period because once it ends, your card will be hit with a high APR.
By having a fixed loan payment, you can expect to pay the same amount each month, which makes it easier to budget. You’ll also have the option to pay off your loan early at any time with no prepayment fees.
When searching for a reliable and affordable auto repair loan, watch out for online scammers and aggregators. Do not divulge your personal information to websites or people before verifying their credibility. After finding the right lender and getting the loan, pay off your loan on time to help rebuild your credit score.
At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.