“Well, I’ve got good news and bad news. Which one do you want to hear first?”
No one ever wants to hear these words, especially from their auto mechanic. But car maintenance and repair costs are unavoidable expenses. And unless you have a second vehicle in the home or you can easily access public transportation, keeping your car in good operating shape isn’t optional. It’s a necessity — and oftentimes an expensive one, especially if you’re not keeping up with routine maintenance.
According to a survey by travel organization AAA, common auto repairs cost an average of $500 to $600, with other major repairs running upwards of $1,000 or more. And 1 in 3 drivers reported they would be unable to pay for an unexpected car repair.1 Even if the repairs needed are the result of a car accident, and may be covered by your auto insurance, you still may be required to pay a deductible of $500 or more depending on your coverage.
So what do you do when you’re faced with a major car repair, and no way to pay for it? First, shop around. Take your quote to another mechanic for a second opinion. You may find a better deal elsewhere. You can also try negotiating a lower price with the mechanic or asking if they’re running any seasonal specials. It can’t hurt to ask!
Once you’ve got your final estimate for repairs, it’s time to figure out how to pay for them. Here are 5 ways to pay for car repairs:
1. Personal loan
One key advantage of using a personal loan to pay for your car repairs is that it allows you to pay the mechanic right away, and spread your payments out over time. If you’re considering applying for a personal loan, choose a lender that can get your money to you fast — as soon as the same day, even — with terms that are easy to understand. In other words, you want to clear about how much your loan is for, how much your monthly payments will be, and how long it will take you to pay it back.
With a fixed-rate, fixed-payment loan, you can expect to pay the same amount each month, which could make it easier to budget. Some lenders even offer the option to pay off your loan early at any time with no prepayment fees.
2. Mechanic financing
Some mechanics partner with lenders to offer their own financing option. It could be a credit card (sometimes branded with the name of the repair shop), or a “payment plan” in the form of a personal loan from its lending partner. You may be offered interest-free financing for a period of months, which is great if you pay off the loan or credit card before the introductory period expires. But if you take longer to pay it off, your “go-to” rate will be substantially higher and you will be required to pay the interest that has accumulated since the original date of the loan.
3. Credit Cards
You can consider using an existing credit card or a combination of cards to pay for the repairs if you have the available credit. But maxing out your credit card(s) comes with its share of difficulties and can limit your ability to pay for future purchases. If you’re thinking about opening a new credit card, look for one with a lower APR, which can give you a lower monthly payment and cost you less in interest. And avoid the temptation to use the card for more than just the needed auto repairs. Otherwise, you could end up deeper in debt with no clear payoff date in sight.
4. Title loan
Much like a payday loan, a car title loan is for a short period of time, usually 30 days, and you can receive your money fairly fast. To get a car title loan, you need to own your car outright or have equity in it. In exchange for the loan, you give the lender the title to your car until the loan is paid in full. For some, a car title loan could be an attractive option for paying for car repairs, especially if you’ve had trouble getting financing elsewhere. But it’s an expensive form of credit— lenders often charge an average APR of about 300%.2 So if you’re exploring this option, be sure to learn more about the pros and cons of title loans.
5. Emergency Fund
Of course, if you happen to have emergency savings set aside, a major car repair qualifies as one of those situations where it’s necessary to dip into your savings. Even if you don’t have enough to cover the mechanic’s bill in full, you may be able to lower the amount financed if you can pay even a portion of the total in cash. Every little bit helps.
Be proactive about routine maintenance
Once you secure financing and get your car repaired, be sure to keep up with your scheduled maintenance services like oil changes to help detect problems early. You’d be surprised at how much routine car maintenance can save you money in the long run.