Cars are such a necessity today that it’s difficult to figure out how to get around without one when it breaks down. Fast repairs are needed to get the vehicle working again, but paying for those repairs isn’t always easy. Auto repairs can be costly, depending on what’s wrong. If there isn’t money in savings to cover the repairs, it might be necessary to look into different auto repair financing options.
Financing provides a way to pay for the vehicle without having to have all of the cash upfront. It’s a way to break down the payment in many cases so paying the bill doesn’t require spending every penny on the repairs and not having enough leftover for standard expenses. When financing is necessary, it is crucial to learn more about the options and to pick one that makes the most financial sense. There are plenty of options to consider, so take time to learn about each one and what they entail before choosing.
Know the Cost of the Repairs
Before thinking about financing, find out how much the repairs will cost. The issue might not be as severe as it seems, so it might not be too costly to repair. An auto shop near me green bay can help with diagnostics and estimates. If it does turn out to be a major repair for the vehicle, or something that’s too expensive to afford all at once, the next step is to look into ways to finance the repair. Vehicle owners have numerous options they can consider to find the best fit for their own financial situation. Once the financing is secured, the repairs can begin, so it won’t be long before the vehicle is fixed and ready to drive again.
Consider Using a Credit Card
Credit cards are the first option for many car owners to consider. The positive side is it can be easy to qualify for a credit card and the repair can be paid off over time. The downside is that there can be a high interest rate for credit cards. By taking time to pay off the repairs, it’s possible to pay a significant amount in interest, which just makes the cost of the repair higher.
Those who have a credit card and who are able to consistently make more than the minimum payment will be better candidates for using a credit card to pay for vehicle repairs. Those who might struggle to make the minimum payment or who will only make the minimum payment over time may want to look into other options, as they will end up paying a lot more in interest before the card is paid off in full.
Look Into a Personal Loan
Personal loans are designed to be used for just about anything the borrower might need, making them a good option when financing vehicle repairs. Unlike credit cards, personal loans can have a lower interest rate. They do, though, depend on the borrower having a good credit score. The amount that can be borrowed through a personal loan will also vary based on the borrower’s credit score and income. The borrower will need to find the right lender to work with, then borrow the money. Depending on the lender, it can take a few business days for the money to arrive, so the borrower may have to wait to have the vehicle repaired.
Finance Through the Mechanic
The mechanic may offer their own financing. Typically, in-house financing is done through a lender that contracts with the mechanic, so there will be requirements for applicants to qualify for the loan. Borrowers may receive enough money to cover the cost of the repairs and will be able to pay off this loan over a period of time. This type of loan is similar to a personal loan, but the borrower won’t have to find a lender to work with to receive the money. It can, however, be easier to be approved with an in-house loan compared to other personal loans.
Use a Home Equity Loan
Home equity and HELOC loans are common today and qualifying for them can be easier than other types of loans. A home equity loan is a type of loan based on the equity someone has in their home, so only homeowners can apply. A HELOC loan is a home equity line of credit.
Instead of a single loan that is repaid, the borrower receives a line of credit they can use, similar to a credit card, for various expenses. Usually, these types of loans are used for home improvement projects, but they can be used for anything, depending on the terms of the loan. The amount that can be borrowed depends on the borrower’s equity in their home, how much the home is worth, and other factors.
Try an Auto Equity Loan
An auto equity loan works much like a home equity loan, though the amount received is generally smaller. With an auto equity loan, the amount of ownership someone has in their vehicle and its value will determine the amount of the loan. If someone has a newer vehicle that is paid off, they can get a significant amount of money through an auto equity loan.
The downside to this, though, is that the title for the vehicle is used as collateral. If the borrower defaults on the loan, the vehicle could be repossessed. It’s important for those considering this type of loan to make sure they can repay the loan promptly to prevent this issue.
Payday or Short-Term Installment Loans May Help
Payday loans and short-term installment loans are easy to qualify for and receive, but they are generally for a smaller amount of money. A payday loan is a small amount that is generally repaid in full when the borrower receives their next paycheck.
A short-term loan is one where the borrower is able to make payments, usually for up to six months, instead of paying it off all at once. With a short-term loan, the borrower may be able to receive more cash. Payday loans are known to be predatory and both have high interest rates, but as long as someone has a job and a bank account, they can qualify for the help.
Consider Asking for Help
Another option may be to speak with friends and family members to see if anyone can lend the money needed for the repairs. If it’s possible to borrow the money from a friend or family member, the borrower may receive more flexible interest rates and loan terms, and they won’t have to qualify.
However, if the borrower doesn’t repay the funds, it can damage the relationship and they may not be able to borrow money again in the future if there is another emergency. Though this can be a great option when it’s available, it’s a good idea to consider it carefully before asking for help from friends and family members.
Ask About Breaking Up the Repairs
Another option is to ask the auto shop if they will accept a payment over time without financing it. If the shop is willing to take payments over time, this can be a good way to pay off the repairs on the vehicle. In some cases, though, the shop will only break up the repairs as long as the total is paid in full before the vehicle is picked up. In these cases, the driver won’t have access to their vehicle while it is waiting on repairs. Depending on the repairs needed and the overall cost, they may not be able to wait that long to receive the vehicle back.
Tips for Financing Vehicle Repairs
When financing a vehicle repair, always make sure the repayment plan is feasible without stretching the budget too thin. If possible, make extra payments to pay off the loan faster to avoid some of the interest on the loan. It’s also a good idea to set reminders and make sure the monthly payment is made on time. If a payment is late or missed, it can lead to significant fess as well as other potential issues, like the loss of the vehicle if it was used as collateral.
Borrowers should make sure they choose the financing option carefully, as they will want to find one that meets their financial needs yet provides enough funds to cover the cost of the repair. Once the loan is repaid, start setting the monthly amount aside and save so that, if repairs are needed in the future, there will be enough money to cover the repairs without issues.
Auto repairs can be expensive, so it may be necessary to finance the cost to avoid paying too much out of pocket at once. Today, there are numerous options available for financing, so it is a good idea to pick the right one for the situation. Find out the total cost of repairs from an auto shop today, then you can look into how to finance the repair and determine which option might be the best one for your budget.