Pay the Bill with Personal Loans for Auto Repair
Getting a personal loan for car repair has become a necessity for many working families. According to an article posted at Forbes.com, average cars cost about $36,000 new. Parts, connective technology, and repairs have become cost-prohibitive. However, personal transportation is something that many families won’t do without. Many families live paycheck-to-paycheck lifestyles and simply can’t afford major car repairs, so it’s necessary to get a loan to pay for a major car repair. Getting a personal loan for car repair is beneficial to many families. There are many options and lenders from which to choose.
Options for Taking Out a Personal Loan for a Car or Car Repair
Maybe someone in the family works on cars, which can reduce the cost of repairs, but new parts are usually needed. Car parts can be very expensive – especially high-tech components. Even routine auto parts like headlight assemblies, fenders, and trunk lids can be expensive to replace. If someone breaks into the family car, it’s more likely that they’ll steal expensive components than the entire car, and those accessories often must be replaced.
The options for car repair financing include traditional bank loans, lending networks, community lenders, credit cards, loans from family or friends, employer loans, and personal loans from private lenders. The car dealership where a person bought his or her car might extend a loan for auto repairs.
How to Get a Personal Loan for Car Repair
Sometimes, repairing an old clunker might not be worth the effort. If the repair costs more than the repaired car is worth, car owners should probably consider getting another car instead of repairing the old one. Applying for a personal loan is easy regardless of whether the borrower has good or bad credit, a high income, or even a regular job. All that borrowers need is a few basic verifications and a few minutes online to complete the application process. Decisions can be quick, and borrowers receive cash in as little as one business day. It takes more time to get approved for loans from banks, credit unions, and community-based lenders.
Getting a Personal Loan to Fix the Broken Car
Personal loans can get people out of many sticky situations such as repairing a car or dealing with damages caused by an accident if the vehicle is uninsured. Even with an insured vehicle, car owners might face other expenses that a personal loan can cover.
When a car owner doesn’t have collision insurance coverage, an extended warranty, or savings, auto repair financing becomes one of the biggest emergencies that commonly face working families. People are dependent on their cars for daily living, commuting, shopping, going to work, and many other purposes. Life doesn’t stop when the car doesn’t run, but for many people without transportation, normal living goes on life support.
According to an article posted at Brookings.edu, about 76 percent of people drive to work in the United States, and another 9 percent of workers commute in carpools. Getting a personal loan to fix a broken or damaged car usually ranks as the highest priority for stranded families. Many people live in communities with limited or no public transportation, so a car is a necessity rather than a luxury.
Car repair loans can be secured or unsecured. Secured loans are often based on the equity of the car being repaired. Some companies specialize in providing auto repair loans at low-interest rates, but many of them require security, such as a car title. These companies can offer long-term financing over 3, 5, or 7 years because they enjoy the security of a lien on the vehicle. Most people prefer the simplicity and shorter terms of unsecured personal loans for financing auto repairs.
How to Finance Car Repairs with Bad Credit
Personal loans for bad credit are the best way to finance car repairs for people with poor credit or no credit. Bad credit applicants usually don’t have good enough credit to receive a bank loan. When buying a car, it’s probably a good idea to get GMAC, bank, dealership, or credit union financing because of the lower interest rates and the secured nature of the loan.
Making car repairs is a different story, however.
Hundreds of lenders offer small personal loans that can be used for auto repairs, and those with poor credit can still find lenders that will approve applicants with bad credit. If a damaged car isn’t a good candidate for repairs, owners must make a decision whether to repair the car or buy a new vehicle. When getting a loan for car purchase or repair, the following tips are recommended:
It’s important to research automobiles and personal loans to have all the facts at hand. These include the Kelley Blue Book value of potential replacements and the value of the damaged car after it’s repaired.
Know the Score
Borrowers need to know their credit scores before beginning to search for loans for auto repairs or replacements. Even with bad credit, many dealers finance auto loans because they hold the note. Two people with identical credit scores may get different results from the same lender, so the more a borrower knows about his or her credit record, the better prepared he or she will be.
Try to Prequalify for a Loan
Credit bureaus are informed that a consumer is considering taking on more debt as soon as the consumer submits an application. That can result in a dip in the borrower’s credit score. That’s why getting prequalified for a car-related loan is a useful practice. Prequalification may not negatively affect credit scores. It’s hard to prequalify with bad credit at banks and credit unions, but it’s sometimes possible to do so with subprime private lenders.
Avoid Dealers that Make Financing Contingent on Buying Extra Services
Dealers inflate car prices. Car buyers should never accept loans that will only be approved if buyers accept the full price of the automobile.
In the 10 years before 2019, automobile loan debts grew by 81 percent to more than $1.27 trillion. However, a market correction has begun, and sales dropped by 3 percent in the last quarter of 2018. There is less interest in long-term auto loans, and lenders are responding by tightening credit requirements.
The average credit score of auto buyers has never been higher. That’s why people with bad credit should explore repairing and restoring their vehicles instead of trading them in on new and expensive vehicles. A personal loan for auto repair makes it possible to repair a car correctly instead of driving with dangerous, jerry-rigged repairs. Even struggling families who live paycheck to paycheck can qualify for personal loans.
Paying the High Additional Costs of Getting a Car Repaired
Getting a personal loan for auto repair provides unexpected benefits for families that need reliable transportation to get to work and to chauffeur the kids to school and dozens of extracurricular activities. Consumerreports.org reports that consumers don’t put aside money for car repairs and associated expenses. (Most of the consumers do not put aside money for car repairs and associated expenses.) That’s an oversight that should be corrected in family budgets immediately to prevent getting caught short when the car or a critical function stops running properly.
When a car stops running or sustains damage in an accident, there are always more expenses than just the repair bill. There may be lost hours at work, transportation costs, the costs of renting a replacement vehicle, the expenses of making special arrangements for alternate childcare providers, and other expenses. Fortunately, personal loans can cover these related costs as well as parts and labor for repair. When people finance car repairs with a personal loan, the funds can be used for that purpose.
Choosing the Right Car Repair Strategy
People tend to get desperate when their cars don't run. Getting around without a car can be difficult, and some people jump at the first solution that gets them back on the road. That can be a shortsighted strategy because it’s important to reassess family finances and budgets when car repairs leave a family too short for comfort.
It’s important to look for the best deal, and borrowers can check with community organizations, churches, and even their employers before taking out a loan with a high-interest rate.
If trying to get a loan, applying at banks and credit unions is often the cheapest way to borrow, but if that’s not an option, borrowers can turn to private lenders.
Remember to check the budget to see if those loan payments are affordable. It’s also a good time to budget money for regular repairs and maintenance if that hasn’t been done. Budgeting for maintenance will help reduce necessary repairs in the future. If the loan payments are affordable, apply now for a personal loan for car repair.