Auto Repair Financing 101

Your vehicle broke down and you don’t have the money to repair it. It happens to all of us at least once or twice in our lives. Nobody anticipates expensive car repairs but they can become necessary when you least expect them. You can finance your auto repair bill at Willoughby Hills Auto Repair, but know the ins and outs of any financing first before you decide on that option.

Personal Loan

A personal loan is an installment loan that is backed by your personal collateral. You will have monthly payments that extend over the duration of the loan, which could be as long as five years, and you will pay interest and fees on the loan. You must have good credit to get a personal loan and if you default on your payments, the lender will take possession of the collateral you used to back the loan.

Before you sign on the dotted line, you should always review the loan details in full to make certain you understand them. The loan principal is the amount you’re borrowing; fees are bank-assessed costs over and above the principal; interest is a percentage of money tacked onto the loan; the APR is the yearly cost of the loan; the repayment term is how long you have to pay the loan back.

Payday Loan

A payday loan might be a good idea if your repair bill is only a couple-of-hundred bucks and you can pay it back next payday but, generally, payday loans are never a good idea. A payday loan is a cash advance against your next paycheck. You get the money early but must pay it back with high interest on the following payday. Some states ban payday loans because people get caught in a detrimental cycle.

Title Loan

You can borrow against your car title if you own it but this is also a risky financing option. You hand over your car title for the money to repair your vehicle and they pay it back within 30 days. If you can’t pay it back, the lender keeps your car. It’s like pawning your vehicle for money. In some cases, the lender will give you additional to pay back the loan, but fees can be as high as 300 percent of the money borrowed.

Credit Card

Depending on your credit card interest rate, you might be okay to put the repairs on the card but do your homework first. Take out your bill and check your monthly interest rate; then, do the math. For example, if your car repair will cost $1,000 and you have a 15-percent interest rate on your credit card, you’ll pay an additional $395 for the repair in interest if you make minimum monthly payments.

Willoughby Hills Auto Repair understands vehicle repairs can go beyond your budget and we’ll work with you to finance your repair bill. We are located in Willoughby Hills, OH, and you can call us at 440-497-0999 for more information.

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