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Auto Repairs Loans - What Are They?

  • by Noel Ballon|
  • 0 Comment |
  • Updated: December 28, 2022 |
  • Loans

Mechanic performing auto repairs

Based on their importance, cars are usually necessities; consequently, there could be lots of problems when they break down or get involved in an accident. Apart from being without it for a while, you may even face more problems if you are charged exorbitant fees for the repairs or you do not have the financial power to fix it. So what should you do in this undesirable situation? Relax and consider these ways to finance auto repairs with no credit check loans near me.


Begin Financing Auto Repairs

Before going ahead to seek the most suitable automotive repair financing method, there are a few things you should do to get the best rate.

•    Ascertain the qualifications of the repair company

Do not commit yourself to working with any repair shop until you are confident the shop owners possess the right skills. Check the certificates of the shop owners and see pictures of other cars they have been able to repair successfully. If they have awards too, you should also make efforts to check for them.

•    Get details of the auto repairs you are getting

After getting in touch with an auto mechanic, take your time to get full details of the repairs that will be done. A good service adviser should be able to give you the details and also allay any fears you may be having concerning the quality of services. With a perfect understanding of the repairs to be done, you are certain of the services you are getting and know whether the quoted repair cost is worth it or not. Contact other repair companies to get a second opinion on the repairs if you have any doubt.


Where to Get Help for Financing Auto Repairs

Having done enough to contact a shop that will help you in fixing your car, getting the best means to finance the auto repair is the next step. Sometimes, your insurance company may offer a form of coverage for you when your car breaks down. However, if you are not covered, there are other methods to use in financing auto repairs. These methods are:


Credit Card

One of the most common and helpful ways for auto repair financing is the use of a credit card, especially if your credit card provider provides any form of reward programs. Through reward programs you might be able to earn some of the cash spent on the repair back; reducing the total amount of your repair bill. Some credit card companies also ensure that customers are protected in case of bad repairs. So, take advantage of credit card options for your automotive repair financing; however, you must pay off the debt at the right time to avoid problems.

Notably, if your credit card cash advances do not offer purchase protection and have a high interest rate, it is recommended that you avoid that option as it would put you in a worse financial situation.


Barter Agreement

Many auto repair shops make sure that automotive repair financing can be done through a barter agreement. Like other kinds of barter agreements, you are going to offer the shop owner a service you are capable of doing well in exchange for the repairs of your car. Whether you are a good website designer or skilled building contractor, discuss with the shop owner to understand if there is any service you can use to barter for the car repairs. Even if you have to pay money for the purchase of spare parts, your repair bills will still be significantly reduced.

Signature Loan

A signature loan is a loan that only requires your signature for it to be obtained. It is a type of unsecured loan which does not require the borrower to put down any collateral. When obtained, these auto repair loans can be used for financing auto repairs or settling any bills. A signature loan comes with different types and levels of interest rates; however, you are likely going to enjoy a lower interest rate if your source of income is verifiable or your credit history is good. Loan payment options for a signature loan is usually fixed at a monthly rate without any changes through the payment period as long as you follow the agreed repayment method. Based on its many benefits, a signature loan is one of the best options you should explore if you are in need of a dependable method for auto repair financing.

Also, if you fail to obtain a signature loan at your first attempt, you can find a co-signer who will shoulder the responsibilities of the loan with you. This will increase your chance of getting a signature loan that can be used for financing auto repairs.


Home Equity Line of Credit or Home Equity Loan

If you own a house and have equity in it, you should consider making use of a home equity line of credit (HELOC) or home equity loan. Your home has equity if its value is more than the balance of its mortgage. In other words, the difference between the value of your home and the mortgage balance is your home equity. For instance, if a home is valued at $140,000 and the mortgage balance is $55,000, the equity in the home is $85,000.

The first step to take is verifying whether you qualify for HELOC or home equity loan. Once you have verified your qualification, proceed to obtain the HELOC or home equity loan and enjoy its massive benefits such as a low interest rate. For your auto repair financing, you do not necessarily have to withdraw all the equity at once as HELOC gives you an option to only withdraw what you need for the repair. Nevertheless, just like in the case of a signature loan, you need a good credit score and a verifiable income to enjoy a home equity line of credit.

Title Loan

If you have a bad credit history, financing auto repairs through the use of home equity loan or signature loan are almost impossible. However, you can always count on auto title loans online in this situation as it does not take your credit history or score into consideration. Following quick and simple procedures, you can quickly obtain a title loan to take care of your auto repairs within 24 hours. Your state I.D. or driver’s license and a lien-free vehicle title are the only things you need to receive the loan you need. After agreeing on the payment plan and interest rate with the lender, the vehicle title will be signed over to the lender. It should be noted that you can get the vehicle title back until after you have paid the loan.

As good and quick as obtaining a title loan for automotive repair financing is, it has two downsides – the interest rates are usually higher, and the lender has the authority to repossess and sell your car if you fail to pay the loan at the agreed time.


401(k) Loan

Another reasonable way to secure a loan if you have a bad credit history is making use of a 401(k) loan. A 401(k) loan is a special type of loan that employees can make use of based on the provision of the 401(k) retirement plan. To obtain this loan, your employer must have offered you the 401(k) retirement plan for your pensions. When you use the 401(k) loan, you are only taking money out of your retirement plan for your auto repair financing.

Apart from the fact that a 401(k) loan does not consider your credit score, its interest rate is relatively low when compared to most of the other types of loans. Furthermore, the interest paid on a 401(k) loan will be returned to your retirement plan; hence, you are making use of the interest to improve your pension.

In a situation where you lose your job, you may be forced to make full payment of the loan in just 60 days or else income tax will be required on the amount owed. Also, if you are not up to 60 years of age, an additional 10% will be paid as a penalty for early withdraw of your 401(k) retirement plan. Based on its merits and demerits, you must consider your job security before financing an auto repair with a 401(k) loan.

In addition to the methods mentioned above, you could contact your mechanic and negotiate a better deal on how to make payments. Many auto shops have special packages that help customers to get reasonable payment terms.

Finally, each of these methods of automotive repair financing has its pros and cons, and as such, none can be distinctively said to be the best. Therefore, everybody must carefully understand the terms and conditions attached to each method. You should only choose a method after you are confident it will help you take care of your auto repair without causing more financial catastrophes.

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