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Car repair loans are an option if you need to make an expensive vehicle repair. Personal loan rates vary by lender, and some offer prequalification without a hard credit inquiry.
There are also alternatives to a car repair loan, including credit cards and dealership financing. Learn more about these options to determine which is best for you.
Personal Loans
Personal loans are an excellent financing option to consider when you need a small amount of cash for car repairs. They offer more flexible terms than payday loans and are available from many traditional lenders, credit unions and online lenders. Credible offers a convenient way to see personal loan rates from multiple lenders, without pulling your credit score. A personal loan can help you pay for auto repair costs and any related expenses, like rent a rental vehicle while your car is in the shop.
Personal loan interest rates are usually lower than auto loans and can also help you save money by spreading your payments over a longer repayment term. However, you should be aware that some lenders may charge a prepayment fee if you pay off your personal loan early.
In addition, a personal loan may not be the best choice for some consumer purchases. For example, if you’re buying a new car or furniture from a retail store, it might be more affordable to use an auto loan secured by the purchase instead of an unsecured personal loan. It’s important to research different options and understand how interest rates, eligibility requirements and loan terms differ between personal loans and auto loans before making a decision. To learn more, subscribe to Select’s weekly newsletter. It features shopping recommendations and in-depth coverage of personal finance, tech and tools, wellness and more.
Credit Cards
While the usual personal finance advice says to avoid credit cards, there are times https://best-loans.co.za/amount-loan/55000/ they can be helpful for funding unexpected expenses. One of those occasions is when you need to pay for car repairs.
Credit card companies often offer financing for vehicle repairs, with some offering 0% interest on those costs for a certain period of time. You also have the option of using a rewards credit card to get cash back or travel miles on those purchases, which can help offset the cost.
However, putting those auto repair charges on a credit card will likely hurt your credit score through a process called credit utilization, which is the percentage of your available credit that you’ve used. For example, if you charge an $8,000 car repair to your credit card with a $5,000 limit, that will use up 60% of your available credit and may cause your credit score to drop.
Another downside of putting car repair expenses on a credit card is that it’s easy to become overwhelmed by debt when you carry a balance. That’s why some people prefer to use cash or borrow from friends and family to pay for auto repairs. Others turn to payday loans, title loans and other high-interest personal loans that can come with a lot of fees. But those alternatives aren’t always a good fit for everyone and are only an option if you can afford to pay back the debt within 24 hours.
Dealership Financing
Many dealerships offer in-house financing for car purchases. They may also offer loan-for-service products. These loans aren’t as flexible as bank or credit union auto loans. Dealership financing often involves a higher interest rate than if you went directly through a lender. That’s because the dealer adds its markup to the buy rate that an associated financial institution quotes them.
The dealer will ask you about what kind of car you want and your income, and then submit an application to lenders for your approval. Afterward, the dealership will work with you to finalize your loan terms. Typically, you’ll compare the dealers’ offers with those from other creditors to determine which one saves you money. It’s important to consider other factors, like the length of the loan and the total amount you’ll pay.
The easiest way to make sure you’re getting the best deal is to get pre-approved for a bank or credit union auto loan before visiting a dealership. That gives you a sense of what kinds of loan terms you might be able to negotiate, and it helps prevent you from agreeing to a dealer’s financing without knowing if there are better options available. Some dealers will also try to sell you special programs backed by the manufacturer that can help you qualify for lower rates or shorter loan terms.
Synchrony Car Care
Between insurance, maintenance and monthly payments, a car can cost thousands of dollars a year. Pricey repair bills can sneak up at any time, and some people may not have the cash on hand to pay a big bill. The $0-annual-fee Synchrony Car Care credit card can help by allowing people to finance their costs over time.
The card (and its 32 co-branded versions) is designed for use at gas stations, auto parts and service locations across the country. It also reports to all three major credit bureaus and accepts online payments and mobile apps for account management. Prequalify with no impact to your credit score to see if you can get approved for the card.
The card can be used to buy all kinds of parts and services for your vehicle, from tires and oil changes to repairs and new rims. You can also find a local merchant that accepts the card to buy and install new accessories like bumpers, spoilers and headlights. The card’s website features a locator map for users to find participating merchants. The card isn’t on a major card network and doesn’t offer rewards, but it can still be an excellent choice for many drivers who want to save money and avoid interest charges when they’re buying a vehicle accessory or need a car repair.