Things you should know before getting a car repair loan

Above: Photo by Malte Luk from Pexels Business News | 14 Sep |

Perhaps all car owners have paid for a car repair one time in their lives. It’s just unavoidable that a vehicle gets damaged from regular use. And this is a serious financial matter since car repairs can go as costly as £300 to £3,000.

If you’re someone who needs your car for work or other important matters regularly, you don’t have a choice but to pay the price.

Of course, there are various ways to finance the cost of your car repair. One of the popular options is a car repair loan. Let’s find out the things you must know before getting a car repair loan.

Ways to Finance Your Car Repair

There are several options for you to cover the cost of your car repair. You can either opt for a secure online payday loan, credit card, or bank overdraft.

Online Payday Loan

An online payday loan can provide you with instant cash whenever your car needs repair. If you badly want to get your car fixed, it’s a good financing option despite its high-interest rate.

Yes, the interest rate for an online payday loan can be costly but there’s a cap set by the Financial Conduct Authority to ensure that you won’t be paying twice the amount you borrowed.

Look for a credible payday loan provider that follows the FCA rules. You can read reviews or testimonials online or visit website about the lender. Before signing an agreement, check for documents or proof that the lender is operating legally.

Credit Card

Using your credit card is another option you can take to pay for the cost of fixing your car. This alternative is useful especially if you’re out of town and suddenly your car breaks down. If you haven’t carried enough cash in your pocket, you can use your credit card to pay the repair shop.

Bank Overdraft

If you have tried using a bank overdraft before, you can call your bank and request it to increase your credit limit so that you can withdraw money to cover the cost of your car repair. A bank overdraft just provides convenience and enables on-time payments.

Car Repair Loan: Your Best Option

Yes, you can get a loan specifically designed for car repairs. The loan amount that the lender will provide you is strictly limited to the cost of fixing your car. Typically, it has a loan term ranging from 30 to 90 days. If you can’t pay back what you owe within the agreed time, the lender might repossess your car.

Since it’s a secured loan, you can apply for this financing even if you have bad credit. It’s not like personal loans that require you to have a good to excellent credit score to borrow money. A lender of a car repair loan will send you the money you want to borrow directly to your bank account once you get the approval.

Car Repair Loan Coverage

As its name suggests, the money that you can get through a car repair loan is for the purpose of paying the amount needed to fix your vehicle. But, besides actual repair, you can also use it for maintenance or servicing like checking or changing the tires. Car maintenance is important to ensure that it works smoothly on the road and prevent it from breaking down.

You can also find car repair loan providers that offer car protection plans and road assistance programs. Sometimes, they also provide cash for vehicle upgrades.

Lenders vary on the loan amounts that they provide. But, when it comes to car repair loans, you can borrow up to $5,000.

Tips When Looking for a Car Repair Loan

When searching for a good car repair loan, make sure to borrow from a lender that has credibility. It’s also crucial that it offers you advantages. For instance, some car repair loan providers offer a 0% interest if you repay your debt within 30 to 90 days.

It’s also advisable to find a car repair loan that has flexible repayment options. The lender should consider your income when crafting the loan’s repayment timeline. More importantly, the loan amount that the lender provides must be sufficient for the cost of the car repair.

Lastly, you should look for a lender that approves your loan application fast. It’s crucial because you can’t wait for too long a time to repair your car.

Do Car Insurance Companies Cover Car Repair Loan Costs?

Sometimes car insurance companies take a long time finalizing claims of an insured person’s damaged car. If that person takes out a loan to cover the cost of the car, the insurance company can pay the loan’s principal amount when the claim is finalized. However, the interests and fees of the loan may not be covered by the insurance.

That’s why you should ask the insurance company about this matter. Insurance companies differ, after all, when it comes to their policies.

Takeaway

It can be a good option to go for a car repair loan if your car gets damaged. This loan can provide you with instant cash to pay the cost of the repair. Just make sure that you know how to pick a good lender for this matter.

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