Auto Repair Financing

Best lenders for auto repair loans

LightStream

LightStream

✔ Funding: Borrow $5,000 - $100,000
✔ Minimum Credit Score: 660
✔ APR: 2.49% - 19.99%
✔ Loan term: 2 - 7 years
✔ Funding turnaround: as soon as same business day

LightStream offers up to $100k personal loans as soon as same business day without origination fees and easy to use mobile app.

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Best Egg

Best Egg

✔ Funding: Borrow $2,000 - $50,000
✔ Minimum Credit Score: 640
✔ APR: 5.99 - 29.99%
✔ Loan term: 3 - 5 years
✔ Funding turnaround: 1 - 3 business days

With Best Egg personal loans, borrowers with fair to good credit can get funding for 3-5 years and have the option to use the loan for a variety of purposes.

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Avant

Avant

✔ Funding: Borrow $2,000 - $35,000
✔ Minimum Credit Score: 550
✔ APR: 9.95 - 35.95%
✔ Loan term: 2 - 5 years
✔ Funding turnaround: within 24 hours in most cases

With Avant personal loans, borrowers with fair to good credit scores can get access to super fast funding up to $35K. Best for debt consolidation.

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What is an auto repair loan?

An auto repair loan is any loan you can put toward your car repairs. There aren’t often loans that are specifically for auto repairs (unless the company doing the repairs offers financing) so you have a lot of different auto repair financing options to explore.

How does an auto repair loan work?

In most cases, your auto repair loan will be a personal loan. You apply and, once approved, the lender will deposit a lump sum into your bank account for you to use as you see fit. You can then use this money to pay for your repairs, and pay it back in monthly installments over the agreed term, which is usually 1-5 years.

What are the benefits of an auto repair loan?

• Receive a lump sum you can use to pay for your car repairs
• No collateral is required for most auto repair loans, so you don’t need to worry about having any of your possessions seized if you were unable to pay back the loan
• Funding is fast – you usually receive funds within 1-24 hours after approval (though this can be up to 3 days)
• You can choose the repayment term that best works for your budget
• You can usually pay it back early with no penalties (though make sure you choose a lender who allows this)

What can an auto repair loan be used for?

If you’re using a personal loan, the money isn’t tied to any one purpose. That means the money is yours to use as you see fit. Some of the common car-related expenses are:

• New transmission
• Brakes
• New wheels and tires
• Body work
• Fixing engine issues
• Fixing on-board computer issues
• Suspension

Are there alternatives to car repair loans?

Yes – a personal loan isn’t your only option. Some of your other auto repair financing options are:

• Credit card: A credit card can be a smart alternative, especially if your costs are minimal or you only need to cover the cost of your insurance excess. If you have good or excellent credit, you may be able to get a card with a long 0% APR introductory offer which will allow you to pay off your repairs over a term of 12-18 months with no interest.
• Home equity line of credit (HELOC): This is where you get a line of credit you can use from a lender, secured against your home. This works much like a credit card because you’re given a credit limit you can use up to, and you can usually reuse credit after you’ve paid it back. Just be aware that, because it’s secured against your home, your home may be seized if you don’t keep up on your payments, so it’s not usually worth it for car repairs. This option can take some time to set up.
• Home equity loan: Much like our option above, except you’re given a lump sum you pay back over an agreed term, like a personal loan. They also usually take a while to get, so aren’t often a good option for car repairs.
• Payday loans: Payday loans are short-term loans where you can usually borrow a few hundred or thousand dollars for a very short term – typically 3 weeks to 3 months. These often have astronomical interest rates and should be avoided since they often lead to financial trouble.
• Title loans: This type of loan is secured against your car. While this may seem like a sensible option at first glance, you need to be careful since you have to give them your car’s title to get them. This means that, while your car may be repaired, you may find yourself without one if you don’t keep up your payments since they can legally take it. They also often have extremely high interest rates, making it all the more likely that they’ll be able to take your car.
• In-house financing: Your auto repair shop may offer financing so you can spread the cost of your repairs. This can be a good option, but make sure you look at their terms and compare them to what you could get elsewhere to minimize the cost of your loan.
• In-house credit cards: If you go to a large chain to get your card repaired, they may partner with a credit card issuer to offer a branded credit card. Make sure you compare these with other cards to check they offer you good terms and worthwhile benefits.
• Friends and family: For some, borrowing from friends and family is a no-go, but if you’re close with your family and they are willing to lend you some money for repairs, this can be a cost-effective way to go about it. Just make sure you are diligent about paying them back as fast as you can to keep your relationship with them in good standing. Another alternative here is to ask if anyone close to you would be willing to co-sign a loan with you, which means they agree to pay for the loan if you default. Make sure this is someone very close to you if you go this route.

What credit score do I need to qualify for an auto repair loan?

To get the best terms, you’ll want a score of 650 or higher, but you can find options if you have a lower score. That said, be careful about where you borrow from if you have poor credit, as you may find yourself in financial difficulty quickly if you aren’t able to cover your payments.

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