What you need to know before getting an auto repair loan
Maybe all car owners have paid for an auto repair once in their lifetime. It is simply inevitable that a vehicle will be damaged by regular use. And this is a serious financial problem, as car repairs can cost anywhere from £ 300 to £ 3,000.
If you are someone who regularly needs your car for work or for other important matters, you have no choice but to pay the price.
Of course, there are different ways to finance the cost of your auto repair. One of the most popular options is the auto repair loan. Let’s find out the things you need to know before getting an auto repair loan.
Ways to finance your car repair
There are several options available to you to cover the cost of repairing your car. You can either opt for a secure online personal loan, a credit card or a bank overdraft.
Online payday loan
An online payday loan can provide you with instant cash whenever your car needs repair. If you really want to get your car repaired, this is a good financing option despite the high interest rate.
Yes, the interest rate on an online payday loan can be expensive, but there is a cap set by the Financial Conduct Authority to ensure that you won’t pay double the amount you borrowed.
Look for a credible payday loan provider who abides by FCA rules. You can read reviews or testimonials online or visit the website on the lender. Before signing an agreement, check the documents or proof that the lender is operating legally.
Using your credit card is another option you can take to pay for the cost of repairing your car. This alternative is useful especially if you are out of town and suddenly your car breaks down. If you don’t have enough money in your pocket, you can use your credit card to pay for the repair shop.
If you’ve ever tried using a bank overdraft, you can call your bank and ask them to increase your credit limit so that you can withdraw money to cover the cost of repairing your car. A bank overdraft is simply a convenience and allows for payments on time.
Auto repair loan: your best option
Yes, you can get a loan specifically designed for auto repairs. The loan amount that the lender will provide to you is strictly limited to the cost of repairing your car. Typically, it has a loan term ranging from 30 to 90 days. If you can’t pay back what you owe within the agreed time, the lender could repossess your car.
Since this is a secured loan, you can apply for this financing even if you have bad credit. It is not like personal loans which require you to have a good to excellent credit rating in order to borrow money. An auto repair loan lender will send you the money you want to borrow directly from your bank account once you get approved.
Car Repair Loan Coverage
As the name suggests, the money you can get through an auto repair loan is meant to pay the amount needed to repair your vehicle. But, besides the actual repair, you can also use it for servicing or maintenance, like checking or changing tires. Car maintenance is important to keep it running smoothly on the road and to prevent it from breaking down.
You can also find auto repair loan providers that offer auto protection plans and roadside assistance programs. Sometimes they also provide money for vehicle upgrades.
Lenders vary on the loan amounts they provide. But, when it comes to auto repair loans, you can borrow up to $ 5,000.
Tips when looking for an auto repair loan
When looking for a good auto repair loan, be sure to borrow from a credible lender. It is also crucial that it provides you with benefits. For example, some auto repair loan providers offer 0% interest if you pay off your debt within 30 to 90 days.
It is also advisable to find an auto repair loan with flexible repayment options. The lender should take your income into account when developing the loan repayment schedule. More importantly, the loan amount provided by the lender should be sufficient for the cost of the auto repair.
Finally, you should look for a lender who quickly approves your loan application. This is crucial because you cannot wait too long to fix your car.
Do auto insurance companies cover the cost of auto repair loan?
Sometimes auto insurance companies take a long time to finalize claims for an insured’s damaged car. If that person takes out a loan to cover the cost of the car, the insurance company can pay the principal amount of the loan when the application is finalized. However, the interest and costs of the loan may not be covered by the insurance.
That is why you should ask the insurance company about it. Insurance companies differ, after all, when it comes to their policies.
To take with
It can be a good option to go for an auto repair loan if your car is damaged. This loan can provide you instant liquidity to pay off the repair cost. Just make sure you know how to choose a good lender for that matter.