While few people are overjoyed about the three- to four-figure sums that typically accompany auto repairs, the cost of getting back on the road can be downright terrifying for those without enough emergency savings.
Auto repairs can be particularly troublesome for poor-credit consumers who may have a hard time finding the financing they need to cover the costs. But a few options out there can help make repairs possible, some of which won’t require a deposit.
Use a Personal Installment Loan for Large Repairs
Given that the average auto repair comes in at more than $500, the bill your mechanic hands over can easily reach into the thousands. When you need to finance a sizeable chunk of money, a personal installment loan is almost always your best bet because they can be repaid through monthly payments over time.
Installment loans can be obtained in larger amounts than most other types of financing, typically ranging from $500 up to $35,000. Repayment terms for most personal installment loans will range from six months up to six years. Most personal loans won’t require a deposit or collateral and can often be dispersed as soon as one business day.
While most mainstream lenders will prefer at least good credit for a personal loan, online lending networks can help you find lenders with flexible credit requirements. BadCredit.org’s expert-rated list of personal loan providers have large network of lenders to help you find a loan that can meet your individual needs and credit profile.
Use a Credit Card for Small Repairs
Depending on the size of your repair bill, it may be feasible to use a credit card to cover the cost. This is especially true in cases where you just need financing for a few weeks, as nearly all credit cards will offer a grace period of one billing cycle to pay off your balance before you’re charged interest.
At the same time, credit cards aren’t recommended for long-term financing, as they tend to have high interest rates, particularly subprime credit cards that often have APRs over 25%. Of course, even the high APRs charged by credit cards will be significantly less than that charged by a short-term or cash advance loan, which can have APRs of three digits or more.
When to Replace Instead of Repair
Depending on the extent of the repairs — and the state of your credit — you may be better off replacing your vehicle than putting thousands into a bottomless pit of mechanical misery. If you can get poor-credit auto financing and find an affordable car that is newer and in better condition than your current vehicle, it may be a better investment to upgrade rather than repair.
That being said, buying another car is a bad idea if you still owe money on your current vehicle (unless you can reasonably sell it — make sure to disclose the needed repairs in your ad). Some dealers may accept a less-than-pristine car as a trade-in, but others will likely balk at one in need of certain high-cost repairs.
You should also consider any additional insurance costs that you may incur from obtaining a newer car. If possible, look for vehicles that still have an active manufacturer’s warranty for the most purchase security.