Breakdowns are inconvenient and can be costly. If you need your car for work or simply to get around, waiting for repairs isn’t an option. Auto repair loans are an easy way to get back on the road quickly if you can’t afford to pay for repairs in a single lump sum.
What is an auto repair loan?
An auto repair loan is a loan taken out specifically to pay for repairs on a vehicle. These loans are useful if you can’t afford to pay for the repairs upfront, but they have other benefits too. They allow you to spread your payments over several months or years. Those fixed, monthly payments are easy to budget for and make auto repair loans a great way to break down higher costs into more manageable increments. Many include fixed interest rates with no prepayment fees, making them even more manageable.
As with any kind of insurance, comparing providers is essential. It can be tempting to rush for the first loan available in the heat of the moment, but it pays to keep calm and compare. There are plenty of comparison sites online that will allow you to input how much you want to borrow and then compare results between lenders. Some of these will perform a soft credit check to deliver a more nuanced quote.
You can also use an auto loan calculator to work out roughly how much you can expect to pay back per month, along with interest. These are the same type of calculators used for working out the repayments on a standard car loan, but they will still give you a ballpark figure on what to expect for repair loans.
Bad credit isn’t prohibitive
Individuals with a bad credit history are often the ones most in need of a loan. There are plenty of tips to help people with poor credit ratings secure loans, so you shouldn’t lose hope if your credit history is poor. Some auto repair loan companies even specialize in insuring people with a low credit score.
Auto loans are the easiest type of loans to take out with bad credit. Lenders will usually need you to own the car outright, but the process is otherwise simple. Since people seeking auto repair loans already have active collateral (the car itself), securing funding isn’t too difficult. The above advice about comparison still applies, though. Don’t rush to the first lender that makes you an offer just because you have a poor credit history.
Don’t always take out a full loan
One way to lower your monthly repayments and reduce interest is to take out a partial loan. If you can afford it, paying for some of the repairs upfront can save you money in the long run while still helping with budgeting. You’ll be surprised at how even minor alterations to the size of your loan can affect the repayment schedule and accrued interest, so paying a small amount upfront is always recommended.