5 Financing Options That Can Help Pay for Your Car Repair

iQuanti: Vehicles can be one of your biggest expenses next to your rent or mortgage. Aside from the car payment, insurance, and gas, repairs can put a big dent in your budget if you aren't financially prepared. Fortunately, numerous quick financing options can help you cover the costs of unexpected repairs. This article will dive into five car repair loans you can choose from if you ever need to cover the cost of a car fix-up.

1. Installment loans

Installment loans are short-term loans that let you borrow a lump sum and repay in fixed principal and interest payments. Installment loans are often available in larger amounts, and you can get them within the same day at some lenders. These benefits and predictable payments make them suitable for larger repairs and easy to budget for.

2. Lines of credit

Lines of credit are flexible loans that let you borrow up to a certain limit as needed. You can then repay the borrowed amount at your leisure. Thanks to their flexibility, lines of credit can work well if your car needs maintenance more often or repair costs are unpredictable. This also makes them suitable for emergency repairs, such as damage.

3. Cash advances

Cash advances are quick, small-dollar loans that can help you cover costs before your next payday. Lenders often have less strict credit score requirements with these types of loans, and will consider additional factors like employment history and income during the approval decision process.

A cash advance can typically give you a few hundred dollars, which you can repay in two to four weeks. You can roll over the loan for an additional fee if you can't repay it, but be careful not to get stuck in too many rollovers.

4. Title loans

If you own the car outright, you could use the title as collateral for a title loan. The title lender verifies that you have income and appraises your car, then offers you a loan equal to 25% to 50% of the car's value. If you accept, you can often get the funds that same day. Plus, you can continue driving the vehicle in repayment. That means you may be able to go from the title lender to the mechanic that same day to pay for the repairs.

5. Pawn shop loans

Pawn shops let you use nearly any valuable item as collateral to get a short-term loan. The pawnbroker appraises your item, then offers you a loan amount and terms with no credit check.

If you accept, you can exchange your item for the loan and a claim ticket. The loan typically lasts 30 days, and may include a 30-day grace period to repay the loan plus interest. You'll exchange your claim ticket for your item when you repay the loan. If you can't repay, you may be able to roll over the loan. Otherwise, the pawn shop can seize the item, but no credit score consequences exist.

Cover the cost of car repairs

Car repairs can cause a lot of stress if you aren't prepared. But plenty of loan types can help you cover the costs of unexpected repairs. Installment loans may work for larger one-off repairs, whereas lines of credit can be a good choice if you have more unpredictable or more frequent fixes. Title loans can help out if you own the car outright, whereas cash advances can stand in if you don't. And pawn shop loans are another option if you are willing to risk a valuable item.

So, the next time car maintenance takes you by surprise, consider one of these loans. Weigh the pros and cons of each to pick the right loan for your situation and budget.

Source: iQuanti

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Categories: Personal and Family Finances

Tags: Budgeting, Debt, Loans