There is no denying it. People need their cars. A car is not just a means of transportation to work, but also an essential tool for running errands, picking up kids from school, and completing daily tasks like grocery shopping and bill payments.
A car breakdown can significantly disrupt one's life, making reliable transportation a necessity. However, car repairs can be stressful, especially with the current increase in prices.
In the past two years, car repair costs have risen by 23%, with even simple replacements like tires increasing from $70 to $150 each, not including the additional labor costs.
According to recent reports, car repairs can cost anywhere from $500 to $5,000, and even those with insurance may still face a deductible of $500 to $2,000 for damages. It's clear that maintaining a car is a significant expense. In recent years, studies have shown that people are keeping their cars for longer periods, with the average ownership period now lasting around eight years.
One of the reasons for this trend is the rising cost of purchasing a new car, which many Americans cannot afford due to high down payment requirements, lack of credit, or reluctance to take on a new car payment. In fact, over the last decade, the length of time people keep their cars has increased by 60%.
Options exist for paying for a car repair and some are better than others. The option you choose depends on several variables including whether you have open credit lines or credit cards, a mechanic you've worked with for a few years, and your job situation.
There are seven options for paying for a car repair. However, those with bad credit will be limited.
Some larger chains that do repairs offer special financing or payment plans for car repairs, with many of those available through a credit card specifically from that repair shop. They may encourage you to apply, and you can get a decision quickly.
However, be aware that those with bad credit may be turned down.
Depending on how well they know you, other mechanics may allow you to make payments. Most won't release the vehicle until you've paid them. Talk to your mechanic to see if they are agreeable.
While you're at it, ask if you can get a discount for using cash. Some mechanics prefer cash and may cut your cost.
It is possible to use funds from a 401k plan to pay for a car repair, but it is generally not recommended. Suppose you are under the age of 59 1/2 and withdraw funds from your 401k for non-medical or non-educational purposes. In that case, you will likely be subject to a 10% early withdrawal penalty in addition to ordinary income taxes on the withdrawn amount.
Furthermore, taking money from your 401k can impact your long-term retirement savings. The money you withdraw will no longer be growing tax-free in your account, which can significantly impact your future financial well-being.
A home equity loan or home equity line of credit (HELOC) is a one-time lump sum that you can borrow against the equity you have in your home. You receive the loan as a cash payment and can use the money for any purpose, including car repairs.
A HELOC is a revolving line of credit that allows you to borrow against the equity in your home as you need it. You can use the money for any purpose, including car repairs.
HELOCs work like a credit card where you have a credit limit and only pay interest on the amount you borrow. It is important to keep in mind that using your home equity to fund a car repair means putting your home at risk if you are unable to make payments on the loan.
Before taking out a HELOC, it is essential to carefully consider your financial situation and make sure that you can afford to make the payments. It may also be wise to explore other options, such as personal loans (more on this below), which may have lower interest rates and fees.
Personal loans are a type of unsecured loan that allows borrowers to repay the loan over time with fixed monthly payments. They are versatile and can be used for a variety of expenses, including car repairs. One significant advantage of personal loans is that they don't require collateral, meaning you don't have to put up any assets as security for the loan.
This can be beneficial for those who don't want to risk losing their home or other assets if they are unable to repay the loan. Another advantage of personal loans is that they can be an excellent option for people with less-than-perfect credit scores. Let’s dive a little deeper into this option below.
Yes, someone with bad credit can get a personal loan. Many online personal lenders like Simple Fast Loans work with people of all credit types.
Simple Fast Loans considers multiple factors when approving a personal loan. Your credit score is just one aspect along with income and other financial factors. The most important thing to know is that bad credit is not an issue for receiving approval.
Simple Fast Loans offers the most hassle-free way to get the money needed to repair a vehicle. The loan range is $200 to $3,000. The application is easy to fill out and you can get a decision quickly. Everything is done online, so you can apply while sitting on the couch. The money for your vehicle repair can be in your account as soon as the next business day.
Simple Fast Loans also breaks out repayments into equal monthly installments, and that can make it easier on the borrower. Being able to budget out payments rather than pay them all at once or having to pay them weekly will bring some financial relief.
The requirements to apply for a personal auto repair loan with Simple Fast Loans are pretty basic. You will need to be at least 18 years old, give your name, address, and Social Security number, provide proof of income, and have an active checking account in your name.
Once approved, the money will be deposited into your checking account.