Compare Auto Repair Loans

When your car needs repairs but you don’t have the money to cover the costs, an auto repair loan can help you get back on the road fast. Instead of paying for repairs upfront, you borrow a lump sum and repay it in monthly installments with interest.

Despite its name, an auto repair loan is not a special type of auto loan. It is simply a personal loan people use to repair their cars. It offers fixed payment terms and can be used for a variety of repairs. Most auto repair loans in the US are unsecured, meaning you won’t use your car or other things as collateral to get approved. You get the funds, you pay your mechanic directly, and you may use any repair shop of your choice.

Because unsecured loans are riskier for lenders, interest rates on auto repair loans can be higher, especially for borrowers with low credit scores. That’s why comparing loan offers is important. Interest rates, fees and other terms of auto repair financing vary widely by lender, loan amount and your state of residence, with APRs typically ranging from 6% to 36%.

What Can an Auto Repair Loan Cover

Auto repair loans help you cover almost any major expense, from $550 to $7,000 for an engine rebuild or replacement. Since these are flexible loans, you can use them for a wide range of auto repairs, including:

• Engine & Transmission: Engine replacement, transmission replacement or a head gasket repair.
• Brakes: Brake pads, rotors and ABS system repair.
• Major Parts: Water pump, starter, alternator and timing belt.
• Suspension and Steering: Shocks, struts and power steering repairs.
• Heating & Cooling: Get your radiator, AC and heater repaired.
• Electrical Work: Car battery, wiring and engine light.
• Other Major Repairs: Exhaust system, new tires and windshield replacement.

No matter what bill your mechanic gives you, you can pay it with car repair financing.

How Do Auto Repair Loans Work?

Auto repair financing works like a regular personal loan in the US. It’s a simple process. You get a repair bill from your mechanic, apply for a personal loan to cover it and repay the loan slowly each month in fixed payments. Since you pay the mechanic directly, there’s no need to use the shop’s expensive financing. This is much better than using mechanic financing.

Here’s How It Works in Simple Steps

• Get Your Repair Bill: The first step is to get an auto repair bill from your mechanic, or you can also get an estimate for the repair cost.
• Check Your Rate Online: Secondly, contact us to check lending offers from trusted lenders in our network.
• Compare Offers and Get Money: We show you the best offers from multiple lenders that operate in your state. Compare rates, APRs and repayment terms to select what works best for your needs. If you are approved, you will get the money directly in your bank account within the same or next business day.
• Pay for Auto Repairs and Repay the Loan: Now, you have the money to pay your mechanic. Then you pay back the amount to the lender with interest every month. The payment will be fixed and remain the same each month until the loan is paid off.

Auto Repair Loans for Bad Credit

Don't worry about your bad credit score when applying for auto repair loans in the US, because lenders in our network offer loan options for people with low credit scores. They only focus on your income and ability to repay the loan.

Important Points to Know About Auto Repair Loans in the US

You know how it works, but there are a few important things you should know before applying:

Most Loans Are Unsecured

Auto repair loans in the US do not require collateral, meaning you do not need to provide your car or any other assets as collateral. Approval is mainly based on your credit score and income, not your car.

You Can Use Any Mechanic and Shop You Want

When borrowing for auto repairs, you are not locked to one shop. You can take the money and pay any mechanic or repair chain in the US that you trust or always use.

Interest Rate Depends On Your Credit Score

Auto repair loans are also available for a bad credit score. This is why the interest rate mainly depends on your credit score. If you have a good score (670+), you can get a loan at a low APR. If you have a bad credit score (below 580), your rate will be higher.

You Can Pay Early With No Extra Fees

Many lenders in the US have no prepayment penalties. This means you can pay off your loan early at any time and save money on interest.

Types of Auto Repair Financing in the US

You know that an auto repair loan is generally a personal loan you borrow to cover your auto repair expenses. But there are other ways to pay for auto repairs in the US. Let’s look at all the options available:

Traditional Personal Loans

This is the safest option for most Americans. You borrow a fixed amount from a lender, and you repay it in fixed monthly payments for 12 to 60 months. But before you borrow, review the terms of personal loan offers.

Mechanic Financing

It is a type of financing offered directly by the repair shop, not by any lender. Although it is easily available, it is risky, as it has deferred interest. If you don’t pay the full amount in 6 months, you will pay interest from day one. It can only be used at the one shop that financed it. The APR is often 0% for up to 6 months, but after that it could be 25% to 29.99%.

Credit Cards

You can use your current credit card to pay your auto repair bills, but be aware that this can be expensive. The interest rate is higher, especially if you don’t pay it off within one month.

Payday Loans

These are short-term loans that you must pay back on your next payday. You either give your lender a future-dated check or give permission to withdraw money automatically from your account on a future date. But we don’t recommend this for auto repair bills because the APR is as high as 400% or more, plus you may get hit with additional charges if you fail to repay the loan on the agreed date.

Title Loans

Title loans use your car as collateral to get cash. This is a risky and expensive loan; that’s why we never recommend title loans to anyone covering their auto repair expenses. You may get approved for this with a bad credit score, but the APR is 100% to 300%, and if you fail to repay the loan amount, your lender can take your car. You could lose your car completely.

Pros and Cons of Auto Repair Loans

An auto repair loan is the cheapest and safest way to cover your auto repair expenses in the US. However, it also has its own set of challenges. Before you apply for a loan to cover your auto repair expenses, it is important to consider its pros and cons to make an informed decision.

Pros

• Fast Money: Many lenders transfer the funds the same day or the next business day once approved. It is best for people who need cash for car repairs.
• Use any Mechanic or Shop: You can use a car repair loan at any shop in the US.
• Fixed Monthly Payments: Most car repair loans are personal loans that are repaid over a set term in fixed monthly payments.
• No Collateral Required: You don’t need to give your car as collateral, so your car is safe while you can enjoy the benefits of urgent car repair loans.

Cons

• High APR for Bad Credit: If you have a low credit score (below 580), the interest will be higher. For a $2,000 loan, you will pay approximately $3,000 total with bad credit.
• Origination Fees: You pay not only interest on the loan but also other charges. Some lenders charge origination fees of 1% to 10% to process the loan. For a $2,000 loan, you may pay a $100 fee.
• Can Hurt Your Credit Score: If you fail to repay the loan, your credit score will go down. This makes future loans more expensive.
• Pay More in Total: You repay the loan amount with interest. So, you pay more than your actual car repair bill.

How to Choose the Right Lender

Before you choose an offer, it’s important to compare multiple lenders and these five things to choose the right offer:

• Check APR, Not Only the Interest Rate: APR tells you the overall cost of borrowing. Your interest rate may be low, but the overall cost will be different because it does not include lender fees and other charges associated with the loan. So, always check the APR.
• Check Prepayment Penalty: Most of our lenders do not charge a prepayment penalty. This helps you pay off debt early without penalties. However, you should confirm with lenders whether they apply a prepayment penalty and choose the one that doesn’t.
• Funding Speed: You can get the funds credited to your account within the same or next business day after approval. But the funding speed may vary by lender and their terms. Hence, check the funding speed and consider the one that transfers the funds as soon as possible.
• Soft Credit Check: A soft credit check doesn’t affect your credit score. So, choose a lender who offers a soft credit check to compare offers. All lenders in our network offer that.
• Reviews: Before you borrow, check what other borrowers are saying about the lender. Check their Google ratings and reviews on trusted portals. Select a lender with a 4.5+ star rating and good customer service. A good lender will have clear terms and no hidden charges.