The car has already ceased to be a luxury item but has become an assistant capable of providing comfort in life and even helping to earn money. But it needs to be serviced, and car repairs are expensive. It is good if you have a safety cushion and this money can be spent on a car. But if your car breaks down and you do not have money, you will have to think about where to get it. There are several options for solving the problem, and each of them has its own pros and cons.
Here are the top 8 ways to pay for car repairs even if you don’t have money
Check if your car has a warranty
If the car needs repairs as a result of an accident, then the warranty company is responsible for paying for it. Some warranty plans may cover repairs even if the driver of the car was at fault in the accident. Warranty can only cover repairs to the injured party. However, warranty companies only pay for certain types of repairs. The details of a possible insured event should be clarified when applying for a warranty. Here are the best extended car warranty companies of 2022.
Consider roadside assistance
Before you call a tow truck, you may consider a better option, such as AAA’s free roadside assistance. AAA Roadside Assistance is designed to get you back on the road. With this service, a car repair professional comes to your vehicle anywhere on a read. The professional makes diagnosis of the problem and if possible, performs instant repair.
Personal loans for auto repair expenses
Can you get a personal loan for car repairs from a bank? Yes, you can. Banks offer various borrowing programs but also have tough borrower requirements. To qualify for a personal loan, the borrower must:
- be at least 18 years old and a United States citizen;
- provide proof of income;
- provide proof of address;
- have a minimum credit score of 670;
- provide valuable assets – or collateral (if you’re applying for a secured personal loan)
- have no delinquency on other loans.
Even if you meet these requirements, it may take up to 5 days to learn the bank’s decision.
Note: if you are under the age of 21, often you will be not able to get a personal loan from a bank.
As you can see, this is not the fastest and most affordable option for those who need fast cash.
Credit cards for car repairs
An alternative to a personal loan is a credit card. According to a recent report by Experian, the 2022 average credit limit for Americans across all credit cards was $30,000. You do not need collateral and guarantors to get a credit card.
The average credit card interest rate is 20.16% for new offers and 15.13% for existing accounts. But often there is a grace period of 25 and 55 days for purchases. If you have time to fully repay the debt before its end, you will not have to pay interest. Additionally, you can get bonuses or cashback when paying for goods and services with a credit card.
A credit card will be accepted for payment without any problems in almost all stores and large car services.
Getting approved for a credit card can take as little as 1 minute. However, it may take a few days, or even weeks, to receive this card.
Other downsides of credit cards are temptation to overspend and high interest rates.
Payday loans for your auto repairs
A payday loan from a microfinance institution will be one of the best options for getting money for car repairs if the damage is small and you need up to $2,500. Applying for a payday loan online is very simple.
To qualify for a payday loan you typically need:
- an active bank account,
- an ID and proof of income (any source of income is accepted).
- you must be at least 18 years old.
Other documents, good credit history, guarantors, as well as collateral are not required.
An application for a loan is considered within a few minutes. Loan approval rates are close to 95%. If approved, you can receive the money transferred to your bank account the same day you apply. Or you can receive the loan in cash at one of the lender’s locations – it all depends on a particular lender, as well as the preferences of the client.
Most Internet users prefer to use online loan referral services that select the best lender for a person based on his needs. Using a loan matching service is free of charge.
Payday loans are issued to borrowers with any credit. And the funds can be used for whatever purpose, including for car repairs. Of course, there are also disadvantages – the interest rate is higher than that of a personal loan, but many microfinance institutions offer loyalty programs and promotions that will help mitigate this disadvantage. Indeed, this is the fastest and easiest option to make money.
Title loans to fix your car
This is one of the fastest options for getting cash quickly. If you need money instantly, while you have a vehicle, you can apply for a car title loan. It can be provided by both banking institutions and car pawnshops – private companies that are ready to issue funds to customers as quickly as possible. Your vehicle acts as collateral. The client receives fast cash at low interest, but the lender has the right to confiscate the car in case of non-payment.
To determine the amount and conditions of the car pledge, the lender creates a special commission, which includes specialists from the credit institution and the insurance company. Based on the results of their work, the amount of collateral is determined. It almost never exceeds 70% of the cost of your car. Some pawnshops, unlike banks, provide the opportunity to extend the contract if the borrower is unable to return the money within the specified time frame.
A car title loan is typically issued quickly – within 24 hours.
Such loans are available only to adult citizens. Credit institutions may not request information about marital status, employment and permanent income. The main condition is to be a car owner. If the client does not repay the debt, the car will become the property of the credit institution. It is important to evaluate your financial capabilities before applying for a car title loan, otherwise, you risk losing your property.
Loans from a private person
If you need to get your car repaired quickly, you can try to borrow money from your family and friends. They will not take interest. But you should be careful: if you default on your loan, you can ruin relationships even with close people.
An alternative option is to apply for a loan from a private lender. Ads from them can be found online and in newspapers. They offer both secured and unsecured loans. But you should be careful: you may come across scammers. Under any pretext, they try to lure the last money from the victim or at least steal personal data and copies of documents to use them in criminal schemes.
It is better to look for a private lender through recommendations. But even in this case, you need to be VERY careful since such services are often offered by people from criminal groups. And if you default on your loan, you can face serious problems and even violence.
Get a pawn shop loan
You should consider a pawn shop loan as a last resort although it involves no paperwork, except for some technical inspection.
Pawnshops do not check credit history – creditors are not at all interested in it since the car will serve as collateral. If the loan is not repaid, the car can be sold by the pawnshop, which, of course, is a huge downside. The interest rate is typically high and varies between 5% and 25% a month. The average pawnshop loan lasts 30 days.
As you can see, all methods of lending have their pros and cons. Which one is more suitable? It’s up to you to decide. But, you’d better not get into such situations when you need a loan in any of the organizations. We recommend that you start an emergency fund for unexpected repairs.