No Cash for Cars: 8 Top Tips for Financing Auto Repairs with Poor Credit
Friday, April 19, 2019, 6:00 AM | Leave Comment
Got some expensive car troubles to fix? You’ll need to know the best ways to start financing auto repairs.
Here are 8 top tips to help you get back on the road.
Are you one of the 55 million Americans who have no money set aside for an emergency?
If you are part of this group, you know how difficult it can be when something goes wrong, such as a car break down, and you don’t have the money to pay for it.
It’s easy to feel overwhelmed when something like this happens.
Luckily, though, there are steps you can take to finance that repair, even if your credit is subpar and you’re having a hard time qualifying for loans.
Read on for eight tips for financing auto repairs.
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Find Out What’s Covered
Before you panic about paying to repair your car, take a deep breath and reach out to your insurance provider.
They may cover the cost of some, if not all, of the repairs. This is especially likely if you were involved in a car accident.Some repairs might also be covered by your warranty. Reach out to the dealership from which you bought your car to see if the damage is covered.
Even if all of the necessary repairs aren’t covered, you may at least be able to reduce the total cost of the repairs by working with your insurance provider or dealership.
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Ask the Mechanic for Financing Options
Another strategy is to ask the mechanic who’s repairing your car if they offer any financing options.
Mechanics usually have some kind of payment plan available, especially to help offset the cost of very expensive repairs.Even if they don’t have a formal plan, they might be willing to work with you if you explain your situation to them. Be honest about your finances and ask if they’re willing to let you make payments instead of paying for the total cost of the repair up front.
If your mechanic does agree to a payment plan or other financing option, honor their agreement and make sure you’re holding up your end of the bargain.
This will increase the likelihood that they’ll be willing to work with you in the future, and it’ll help you get rid of your debt more quickly.
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Use a Credit Card
This might not seem like a great idea at first. If you believe that you’ll be able to pay off the cost of your repairs within a few months, though, using a credit card can be a good option to consider.
Remember, only use a credit card if you’re confident in your ability to pay off the balance quickly.
Credit cards typically have high interest rates, and your debt could pile up and become more difficult to manage if you don’t pay off the repairs as soon as you can.
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Use a Home Equity Loan
You may not qualify for a personal loan, but are you a homeowner? If so, a home equity loan or a home equity line of credit could be a good option to consider.
These financing options allow you to borrow from the equity you have built up in your home.
When you use either of these options, you may have access to a higher credit limit than you’d have with a different type of loan. You might get a lower interest rate, too.
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Use a 401(k) Loan
Another option is a 401(k) loan. This allows you to borrow from the money you have set aside for retirement.
401(k) loans tend to have lower interest rates, too, and there aren’t any tax penalties as long as you pay them back by a certain date.
The great thing about a 401(k) loan, too, is that, when you pay it back, you’re paying back money to your future self. This allows you to benefit more from the repayment process.
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Apply for a Bad Credit Loan
There are personal loans available designed specifically for folks who have poor credit scores. If this is you and none of the above options is a good fit, you might want to consider one of these loans.
Bad credit loans have higher interest rates and they may have stricter terms. If you get approved for a bad credit loan, you might have a smaller amount of money available to you, too, since you’re considered a high-risk borrower.
The good thing about these loans, though, is that you can use them to improve your credit score. You just have to make sure you pay them back on time.
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Try a Pawn Shop Loan
A pawn shop loan provides you with a loan based on the value of a certain item (or items). If you have belongings that are worth a decent amount of money, a pawn shop loan is a good option to consider.
In exchange for a pawn shop loan, you will leave your belongings behind as collateral. When you repay the loan, you’ll get your item back. Some pawn shops also operate as title loan centers and will let you use your vehicle as collateral.
Pawn shop loans don’t require a credit check, so you don’t have to worry about being turned down for having subpar credit. You do have to make sure you pay your loan back on time, though, otherwise, you’ll risk losing your belongings.
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Consider a Cash Loan
Finally, consider applying for cash loans from a reputable payday lender.
If you’re confident in your ability to pay the loan back quickly, this is a good option. You won’t have to have your credit reviewed, and all you’ll need to provide is a valid ID and proof of income.
The key, though, is to only borrow what you can afford and make sure you pay the loan back on time. Otherwise, you could end up dealing with very high interest rates and fees.
Need More Help Financing Auto Repairs?
As you can see, there are many different ways that you can go about financing auto repairs.
Even if you have less-than-stellar credit, these tips can help you get the money you need to take care of your car and get it up and running as soon as possible.
Are you interested in learning about ways that you can save money on auto repairs?
There are actually a lot of ways that you can reduce the cost of your repairs and stretch your financing options a little farther. Start by checking out this article on saving money by handling auto repairs yourself!
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