Regardless of your credit history, there are several auto repair loans available to help you finance your costs. While our list of the best personal loans for auto repair can be a great place to start, take some time to shop around and compare several offers to ensure you get the best deal.
With that said, if you need a small loan, PenFed Credit Union and First Tech Credit Union are solid choices. And if you want to avoid an origination fee, consider SoFi, PenFed, or First Tech. If you have excellent credit and want to maximize your interest savings, Upstart is a good place to start; it’s also a good lender if your credit needs some work, as is Upgrade. Finally, Rocket Loans can be a good fit if you need money today.
How to Choose the Best Auto Repair Loan
Should You Apply for an Auto Repair Loan?
An auto repair loan can be a good idea if you have good credit and don’t have less expensive options at your disposal—we’ll cover some alternatives in a minute. These loans are especially worth considering if your vehicle is inoperable and you need transportation to get to work or school.
That said, auto repair loans for bad credit can be expensive, so if those are your options, make sure you understand and can bear the costs before you proceed. And if you can find less expensive ways to accomplish your goals, an auto repair loan might not be the best fit.
Factors to Consider When Comparing Auto Repair Loans
As you shop around and compare options, here are some factors to keep in mind to ensure you get the best deal and experience:
- Eligibility requirements: Determine whether the lender is transparent about its credit and income requirements, and also check whether the lender offers pre-qualification with a soft credit check. Most lenders won’t tell you the exact required credit score, so pre-qualification is important.
- Costs: Get pre-qualified with multiple lenders so you can compare their annual percentage rates (APRs). Watch out for origination fees, which are usually deducted from the disbursement amount and can leave you short on your cash needs.
- Repayment terms: Depending on where you look, repayment terms typically range from one to seven years. Check to see how flexible a lender is with its options and whether you can afford the monthly payments.
- Loan amount: Review each lender’s terms to make sure your desired loan amount is within its range of offerings.
Alternatives to Auto Repair Loans
Depending on your situation, you may be able to take advantage of other opportunities to cover your auto repair costs. Keep in mind, though, that some may be more expensive than others:
- credit cards: If you have good credit, you may be able to qualify for a credit card with an introductory 0% APR promotion, which can save you hundreds of interests. Even if your credit is in poor form, you may be able to use an existing credit card to cover your repair costs. Just make sure you pay off the balance quickly to avoid high interest charges.
- Car repair insurance: Car repair insurance, sold as a separate policy from normal auto insurance, can help cover costs and is often inexpensive, but it only covers certain types of repairs and may be redundant with the coverage you already have.
- Borrowing from family or friends: If you have the right kind of relationship with a loved one, you can borrow money and repay it without interest or fees. Just make sure you draw up an official contract for the loan and pay it on time or early to avoid damaging your relationship.
- Payday loans: Payday loans are often easy to obtain, even if your credit is in direct form, and loan amounts can range anywhere from $50 to $1,000, depending on where you live. But payday loans aren’t recommended, as APRs average 400% or more, and you’ll typically need to repay the debt within 14 days.
- Auto title loans: If you have significant equity in your car or own it outright, you may be able to get an auto title loan. But like payday loans, auto title loans aren’t recommended because they can be incredibly expensive, with APRs of upwards of 300%.
Frequently Asked Questions
An emergency auto repair loan in the form of a personal loan can be used for just about anything you want, so you generally don’t need to worry about restrictions. Restrictions on personal loans are usually limited to paying for higher education costs and illegal activities.
If you have good credit, you may be better off applying for a credit card with a 0% APR promotion. However, if your credit isn’t good enough to qualify for a 0% APR card, you may be able to get a lower interest rate with an auto repair loan than you would with a standard credit card.
Additionally, auto repair loans offer a structured repayment plan, making it easier to budget compared to a credit card with a minimum monthly payment. As you consider your options, think carefully about your needs and goals to determine the right fit for you.
You can get an auto repair loan from a wide variety of lenders, including online lenders, online banks, credit unions and traditional banks. Again, take your time to shop around and compare terms from multiple lenders before you decide to apply with one.
There’s no universal minimum credit score requirement to get approved for an auto repair loan. While some lenders may require good or excellent credit to get approved, others specialize in working with bad-credit borrowers.
As you shop around, be sure to go through the pre-qualification process to get an idea of your approval odds and potential loan terms.
Investopedia is dedicated to providing consumers with unbiased, comprehensive reviews of personal loan lenders. To rate providers, we collected hundreds of data points across more than 40 lenders, including interest rates, fees, loan amounts, and repayment terms, to ensure that our reviews help users make informed decisions for their borrowing needs.