Tips

What Are the Options for Financing Auto Repair?

Unless you have a ton of savings that you can easily tap into, an expensive automobile repair is going to hurt. Hopefully, you do have accessible savings, but if you don’t, you can use financing for your trip to the auto shop. This isn’t ideal but it will get your car fixed and you back out on the road. Just make sure you use a reputable auto service shop, such as Marks Auto Service.

Traditional Loan

If you have good credit and your debt-to-income ratio isn’t too high, you will probably be able to secure a traditional loan from your bank or other financial institution. A traditional or “personal” loan can be used for just about anything. Your bank will ask why you are taking out the loan and auto repairs are a good reason. The application process is straightforward and you must show you have healthy credit and a history of paying your bills on time before the loan will be approved. If approved, you’ll be expected to make monthly installments of loan principal plus interest until the loan is paid back.

Payday Loan

If you have bad credit, you could take out a payday loan but be cautious if you do. Payday loans are tricky and addictive. You borrow money against your next paycheck and it must be paid back on your next payday. People can get into a trap with these loans if they live paycheck-to-paycheck. The interest for a payday loan can be as much as 300 percent, which means if you borrow $500, you may have to pay back three times as much, especially if you can’t pay back the full amount borrowed on your next payday. Honestly? It’s better to ask family or friends for the money than to take out a payday loan.

Title Loan

It’s also better to ask family or friends for a loan than take out a title loan, but you may have no choice but to find your auto-repair financing through an alternative lender. If you own your car, truck or SUV, you can offer the title to the lender in exchange for the money you need to have the vehicle repaired. Once you pay back the loan, the lender will give you your title back. If you cannot pay back the loan, the lender keeps the title and takes your vehicle as collateral. This loan also comes with high interest rates, so avoid it if you can. Try to find a better way to finance your car repair.

Some auto shops like Marks Auto Service in Rockford, IL, offer financing programs to qualified customers.