Car Repair Loan: What You Need To Know, And Where To Find One

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Do you need cash to pay for unexpected vehicle repairs? A car repair loan can be a solution to get you back on the road. (iStock)

If you own a car, at some point you will come across a car repair that is not covered by your vehicle warranty or insurance. That could mean a big bill or be stranded with no wheels.

Without enough savings to spend on repairs, you will have to raise the funds to get your vehicle back on the road. A car repair loan is a solution to getting your vehicle repaired and running again. Here you will find everything you need to know about this financial product.

What is a car repair loan?

A car repair loan is any type of loan that can be used to pay for car repairs – this is usually an installment-based personal loan.

With a car repair loan, you borrow a lump sum that you can use to cover your car repair bills. You are responsible for the monthly repayment of the loan for a specified period of time including interest at the agreed rate.

You can Compare personal loan rates from different lenders in minutes with Credible.

How do auto repair loans work?

When you take out a car repair loan, you can expect it to work just like any other personal loan. Once approved, your lender will offer personalized loan terms. These dictate how long do you have to repay the loanwhat your fixed monthly payments are, what the interest is, and whether you can repay the loan early without any prepayment penalties.

Personal loans are usually unsecured. This means that borrowers do not have to guarantee the loan with existing assets – also known as collateral. However, borrowers typically need to have good credit ratings and a stable source of income to qualify.

Benefits of Car Repair Loans

When faced with a heavy bill from your mechanic, there are a few advantages to taking out a car repair loan:

  • No collateral is required. Unlike many other loan products, car repair personal loans are unsecured. You do not have to do not deposit any collateral – like the title of your car, home equity, or savings account – to take out the loan.
  • You receive the loan in a one-off payment. Your lender will provide you with the entire loan amount at once so you can pay for your repair shop and get started.
  • Funding is generally pretty quick. Depending on which lender you choose, you may be able to get your car repair loan as early as the next business day.
  • The interest rates are often lower than other products. The interest rates on personal loans are usually lower than credit cards or payday loans. Your actual interest rate will depend on your creditworthiness, income, and loan terms.

How to apply for a car repair loan

Borrowing money to pay for car repairs can be a simple process. Depending on your individual situation and financial history, it can also happen relatively quickly.

1. Determine how much you will need to cover your repair costs. Take into account things like parts, labor, and any towing fees incurred.

2. Shop around a lender. Apply for a car repair loan from multiple lenders or shop through a platform like Credible for multiple quotes in one place. This not only saves you time and you can do without it Impact on Your Credit Scorebut also tells you how much you can qualify for and gives you the best deals possible.

3. Choose your loan. Choose your lender based on the best loan terms they are offered (e.g. repayment duration, monthly payments and interest rate) and even how quickly you can get your loan funds.

4. Apply. Submit a loan application includes a tough credit check, which temporarily lowers your score by at least a few points.

5. Get your money. Your lender will deposit your loan money into the account you specified. Depending on which lender you choose, you might get your money the same or the next business day.

Where can I find a car repair loan

Most banks, credit unions, and online lenders offer personal loans for car repairs.

If you already have a relationship with a bank or credit union, you may want to see what loan terms and rates they offer. Otherwise, shopping online can be a great way to get multiple quotes at once without sacrificing your credit score.

Credibility makes it easy Compare personal loan rates from multiple lenders.

15 Lenders You Should Consider For Car Repair Loans

If you are in need of a car repair loan, consider these 15 credible affiliate lenders.

Avant

  • Loan Amounts: $ 2,000 to $ 35,000
  • Minimum creditworthiness: 550
  • Financing time: The next working day

Axos

  • Loan Amounts: $ 5,000 to $ 35,000
  • Minimum creditworthiness: 740
  • Financing time: The next working day

Best egg

  • Loan Amounts: $ 2,000 to $ 50,000
  • Minimum creditworthiness: 600
  • Financing time: Just one to three working days after successful verification

Discover

  • Loan Amounts: $ 2,500 to $ 35,000
  • Minimum creditworthiness: 660
  • Financing time: The next working day after acceptance

Freedom plus

  • Loan Amounts: $ 10,000 to $ 35,000
  • Minimum creditworthiness: Does not disclose
  • Financing time: After just two working days

Lending Club

  • Loan Amounts: $ 1,000 to $ 40,000
  • Minimum creditworthiness: 600
  • Financing time: After just two working days

LendingPoint

  • Loan Amounts: $ 2,000 to $ 36,000
  • Minimum creditworthiness: 580
  • Financing time: The next working day

LightStream

  • Loan Amounts: $ 5,000 to $ 100,000
  • Minimum creditworthiness: 660
  • Financing time: Already on the same working day

Marcus from Goldman Sachs

  • Loan Amounts: $ 3,500- $ 40,000
  • Minimum creditworthiness: 660
  • Financing time: Usually three working days

OneMain Finance

  • Loan Amounts: $ 1,500 to $ 20,000
  • Minimum creditworthiness: None
  • Financing time: On the same working day (but usually requires a visit to a branch)

PenFed

  • Loan Amounts: $ 600 to $ 50,000 (depending on the loan period)
  • Minimum creditworthiness: 670
  • Financing time: Just two to four working days after verification

Thrive

  • Loan Amounts: $ 2,000 to $ 40,000
  • Minimum creditworthiness: 640
  • Financing time: Already on a working day

SoFi

  • Loan Amounts: $ 5,000 to $ 100,000
  • Minimum creditworthiness: Does not disclose
  • Financing time: Three working days

Update

  • Loan Amounts: $ 1,000 to $ 50,000
  • Minimum creditworthiness: 560
  • Financing time: Within one working day after approval of the necessary checks

upstart

  • Loan Amounts: $ 1,000 to $ 50,000
  • Minimum creditworthiness: 580
  • Financing time: Already on a working day

When you’re ready to apply for a car repair loan, use Credible to Compare personal loan rates in minutes.

3 Car Repair Financing Options That You Should Avoid

If you have to pay for a car repair and can’t (or don’t want to) take out a personal loan, you have a few other funding options. However, they can be costly and should only be considered as a last resort.

Payday loan

  • Short credit periods, often around two weeks
  • Very high fees that correspond to an APR of 390% to 780%
  • Low credit limits (anywhere between $ 100 and $ 1,000, depending on government regulations)

Car loan

  • Loans are usually limited to 25 to 50% of the vehicle’s value
  • The title of your vehicle is kept as a security
  • Average financing fees that correspond to an APR of around 300%
  • Usually, the repayment has to be made in just 15 to 30 days

Cash advance by credit card

  • Usually have higher financing fees than normal credit card purchases
  • May also charge transaction fees
  • If you do not pay the remaining amount in full, the interest will be topped up with the next billing cycle


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