Auto Repair Loans for Good and Bad Credit

The average cost of car repairs varies, going from less than a hundred to several thousand. It all depends on what's wrong with your car. Check auto repair loans rates here.
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Having a car break down, especially if it’s in the middle of nowhere, can be doubly alarming. Figuring out how to get home and what to do with your car is unsettling enough. But sometimes that’s the easy part compared with trying to figure out how to pay for the repairs. And that’s where auto repair loans can be as much of a relief as being stranded on a highway and spotting a tow truck.

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Average Cost of Auto Repairs

So how much do auto repairs generally cost? As you can probably guess, the average cost of car repairs varies, going from less than a hundred to several thousand. It all depends on what’s wrong with your car.

For instance, if you’re in a wreck, and you have to replace the airbags, that can cost $1,000 or more. If your air-conditioning needs repaired, that might be as little as $200 or more than a thousand bucks.

A big part of the problem of expensive repairs and struggling to pay them is that with newer cars, they’re more technologically advanced than what we were driving, say, 10 or 20 years ago. Today, if you bang up a fender, you probably are going to pay for more than hammering it back into shape. You probably have several ultrasonic sensors, a radar and maybe a camera to replace and calibrate.

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Auto Repair Loans to Avoid

If you start researching auto repair loans, you’re going to find some advertising pointing you to a title loan, cash advance or a payday loan. You really don’t want to do that. (If you see the term, “no credit check” in an ad, that’s a good sign that you should stay away.) Even using credit cards to pay for a car repair can be problematic.

Avoid Payday Loans for Auto Repair

Payday loans can sound good, and some of the advertising can seem so reasonable. Providers like to say that what you pay for a payday loan isn’t as much as you’ll pay if you bounce a check or go into overdraft. And it is absolutely true that it’s possible to take out a payday loan and have things go well.

But, boy, when they go wrong… The Center for Responsible Lending (CRL) points out that payday loan interest rates average an eye-popping 391% APR (annual percentage rate). And while the math can look good, payday loans are designed so that a borrower ends up borrowing the money and paying it back – but then borrowing it again – which means spending more in fees.

The average payday loan borrower, in fact, renews over 10 loans every year. By the time you’re done, it’s typical to have spent more on fees and interest than the amount you owed – and usually along the way, you’ve wound up paying other bills late, or perhaps you’ve gone into overdraft at your bank or even lost the account because you never had enough money.

Payday loans are a gamble. A personal loan for auto repair, much less so. You might feel lucky, but if you need money, your luck already isn’t so hot. Do you really want to take the risk that you can pay one back?

Don’t Fix Your Car With an Auto Title Loan

If your car is paid off, you can get an auto title loan. Their terms are longer, but they are often more expensive than payday loans. The average fee to take out a $500 auto title loan is $125, according to the Federal Trade Commission. Think about that. To borrow $500, you’re going to pay $125!

It gets worse. The CRL says that the average car title borrower renews the loan eight times. If you borrowed $500 eight times, you’d spend $1,000 in fees. And guess what happens if you can’t keep up with the payments? You lose your car (hence the name “auto title loan”). According to the CRL, one in five auto title borrowers see their car repossessed.

Credit Cards for Car Repair

Using credit cards for auto repair is perfectly reasonable, and we wouldn’t want to suggest otherwise. If you have available credit on a credit card, then, sure, that’s a fine way to pay for car repairs.

But while credit cards can be a convenient way to pay for auto repairs, they’re not always the best way to finance auto repairs. If you can’t pay off the credit card balance in a few weeks or months, it can cost you in several ways.

Here’s why. If your auto repair maxes out your credit limits, you have nothing left for any other purchases or emergencies. And then there is the more likely issue – the high interest rates and extended repayment. Credit cards often have high interest rates, averaging about 7% higher than comparable personal loan interest rates.

Adding to your credit card debt for an extended time also increases your credit utilization. That causes your FICO credit score to fall, and that can make it harder and more expensive to borrow in the future. Most credit experts recommend keeping your credit card utilization at 30% or lower.

Everybody’s financial situation is different, and for some people who have auto repairs to pay off, credit cards will be the answer. For others, a personal loan is probably the better way to go.

Personal Loan for Auto Repair

There are a number of advantages that personal loans have over other kinds of auto repair loans.

High borrowing limits

You can often borrow as much as $40,000 with personal loans. Clearly, not everybody get borrow that much. It depends on your credit score, income and your lender’s policy – but if you can probably take out enough to not just fix your car but take care of things like credit card consolidation, home repair or even a vacation.

Fixed interest rates

Most credit cards offer variable interest rates, which means that if you’re carrying revolving debt, you might see your minimum payments climb all over the map. Fixed interest rates, which most personal loans offer, make financial planning easier.

Fast transaction

Often, you can get the money the next day. Which, of course, is important if you need to get back behind the wheel.

Lower interest rates

As of this writing, the average personal loan interest rate is 10.7%, whereas the average credit card interest rate is a little under 17%. Which means you might want to consider paying off your credit card with a personal loan, assuming the interest is lower. But only try that if you’re confident you won’t get into the revolving credit card trap again.

Related: Personal Loan Interest Rates (How to Pay Less)

Potential to improve credit score

If you borrow too much with a credit card, that’ll increase your utilization and potentially lower your credit score. But a personal loan would let you avoid this dilemma. You might be able to borrow enough to fix your car and pay off your credit card balances. That could save you money and quickly improve your credit score.

Fix Your Car With a Personal Loan

In much of the country, you need a car – to get to work, or class or safely around town. So a fast loan to fix your car isn’t exactly a luxury – it may be a necessity. Luckily, you can find personal loan offers and lenders right here for most repair amounts – whether they’re little fender-benders or big engine rebuilds.

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About Author
Geoff Williams
Geoff Williams is a freelance journalist and author in Loveland, Ohio. His articles have appeared in publications such as MoneyRates,, U.S. News & World Report,, The Washington Post, Entrepreneur Magazine,, Life Magazine, Ladies’ Home Journal, Entertainment Weekly, Cincinnati Magazine and Ohio Magazine. Williams is also the author of several books, including “Washed Away: How the Great Flood of 1913, America’s Most Widespread Natural Disaster, Terrorized a Nation and Changed It Forever” and “C.C. Pyle’s Amazing Foot Race: The True Story of the 1928 Coast-to-Coast Run Across America.”