When you are faced with a car that needs a great deal of work you may need to consider ways to finance automotive repairs. While small, regular maintenance costs to your car are often affordable, a large repair can be costly.
Options to Finance Automotive Repairs
Here are five options to help you finance automotive repairs that you are unprepared for. While you may remember to set aside some money into savings for regular car maintenance (like oil changes, tire rotation, air filters, etc), it can be hard to remember to set aside a little extra for any major repairs needs that occur. These big repairs always seem to come at the most inconvenient and unexpected times possible. However, by planning ahead and being aware of your financial options, you can be better prepared for financing your large automotive repairs quickly.
Get a Personal Loan
Personal loans are a great way to get the financing you need to cover those major automotive repairs. This type of loan requires that you have good personal credit and income to support the repayment of the bill. This is called an unsecured loan. The bank is relying on your good history to show that you will be able and willing to repay the loan. You can apply for these at local banks or online in minutes.
Car Title Loan
Many states allow for the use of car title loans. These are essentially short-term loans that use your vehicle as collateral for the loan. Therefore, in the event that you default on the loan, the lender can seize your car. However, these make the perfect short-term loan that can help bridge the gap between paying for unexpected car repairs and your next payday. Keep in mind that you need to either own your car outright to get this type of loan or you need to have enough equity where you owe less than the value of the car to put it up for collateral.
Repair Shop Financing
You may be surprised to unearth the fact that a large auto repair shop may offer to finance your repairs. This is always a great option that you should ask about when getting your car repaired. Not all repair shops will offer to finance, but some will. It doesn’t hurt to ask as it could save you a lot of running around trying to find an alternative source of funding for your unforeseen car repairs. The interest rates you get through repair shop financing will often be better than you would find for a credit card or personal loan.
While this may go against everything your financial adviser has told you, using a credit card can be a convenient option to pay for car repairs when you don’t have the funds in your bank account. With the availability of low or no APR interest rates for new cardmembers, it may be a good idea to apply for a new credit card to finance your auto repair bill. Just make sure that you can pay off the credit card before the no or low-interest period ends. Additionally, if you know you’ll have the funds after your next paycheck, a credit card may not be the worst option if you can make a payment before you’ve accumulated too much interest.
Ask Family or Friends for a Loan
If you don’t want to end up stuck with a ridiculous interest rate, you may want to consider asking a friend or family member for a loan. To make them more comfortable with the situation, be sure to get the entire loan in writing. Include the loan amount, interest rate if applicable, term length, and monthly payment. Be careful about abusing this privilege and asking too often from loved ones. Few things put as much of a strain on relationships as owed money.
Paying for large auto repair bills can have you stressed out. Knowing what your potential options are can be a big step in the right direction. The above are five different ways you can go about financing your large automotive repairs.
About the Author
Anica Oaks is a freelance writer who hails from San Francisco. When she’s not writing, she’s enjoying her time outside with her dogs. Anica recommends finding an auto repair shop that will work with your needs. Keep up with her on Twitter @anicaoaks.
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