How Can I Use a Personal Loan to Pay for Auto Repairs?

Image by Robyn Wright from Pixabay

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You might be financially disciplined, with some money set aside for car repairs you may need during the month. But what happens when the repair is more expensive? You have a few options. 

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You can use public transport until you get funds to repair your car, or you can get a personal loan. When you think about the inconveniences of public transport, the latter becomes an option. Should you get a loan?

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How to Get a Personal Loan to Repair your Car

A personal loan caters to many needs, from debt consolidation to paying vacation expenses. So, why get a personal loan when you want to repair your car?

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Lower Interest Rates

Since it's fixed, you'll minimize the risk of falling into debt as you'll pay the same interest rate throughout the repayment period. Additionally, personal loans have more reasonable repayment terms. 

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Variety of Online Lenders

It's also easier to apply for such loans because there are numerous online lenders. It'll take less time to find and apply online than to get a loan from a traditional financial institution.

For example, say you live in Nebraska, and your car breaks down. First, go online and search for Online Nebraska loan lenders.
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Variety of Personal Loans

You can get a secured or unsecured loan. Secured loans require collateral. For instance, an auto or mortgage loan uses the same asset as security. 

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An unsecured loan doesn't require security because it depends on your creditworthiness. Therefore, you'll get the money to repair your car after the lender looks at your credit score and credit history. 

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If you have pending debts or defaulted payments, you may have to forego the unsecured loan option and instead apply for a secured loan with your car as collateral. It might be tough to get an unsecured loan, and the interest rate might be high.

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How to Pay for Car Repairs Using a Personal Loan

There are a few things to do before you ask for a loan. Also, if you're dealing with emergency repairs, you may consider other ways of financing, as lenders don't always process loans in a few hours. It may take hours, a day, or days. 

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For example, a secured loan requires asset evaluation so the lender can see whether the money you're asking for is worth the item you provide as security. Also, there's the process of analyzing your credit score when asking for an unsecured loan.

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Here's what to do before you ask for a loan.

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Assess your Repair Needs

Image by Nate Olsen from Creative Olsen

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Generally, a car repair loan is an option:

• When the repair cost is higher than what you can afford out of pocket.
• When you have a good credit score; hence, it'll attract a lower interest rate.
• When the repair cost is less than the price of a new vehicle.
• When your other options are using a credit card, getting a payday loan, or other high-interest financing methods.

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Start by getting an auto repair quote. It could be for the specific problem you're facing with your car, such as a blown head gasket or when the engine is overheating or leaking engine oil. 

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Alternatively, you could ask for a quote for general maintenance when you have several car problems and can't tell the most prominent one.

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Assess your Financial Situation

Since this is an installment loan, the lender will give you a lump sum and set the installments you'll make until you clear the loan. Hence, ask for what you need. These repayments will take a part of your income, so it should be an amount that you're comfortable repaying without defaulting.

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If you're already struggling financially, monthly repayments on the new loan might worsen the situation. Therefore, see ways to reduce your other expenses so you can have money to repay the loan as soon as possible.

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Compare Lenders

You want to get a loan at the most convenient terms in the market. It includes origination fees and any other expense that comes with a loan application. You'll also be looking at the interest rate and the quality of customer support a lender gives. 

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We're not saying that you intend to default on repayment, but it helps to know the possible penalties in such a scenario. Also, check the application process, the documents needed, and the processing time.

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Final Thoughts

No, you don't have to forego the convenience of using a private car because it broke down and you don't have money for repairs. The only thing you should do is get a repair quote to know how much you need, then find a lender. Personal loans are better than payday loans and credit cards. You'll get a lower interest rate if you have a good credit score, it's a fixed-interest rate loan, and you can use your car as collateral if you want a secured personal loan.

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If you are local to Omaha, Nebraska. Gateway Auto, a 5 star locally trusted auto repair shop, offers car care financing with six months of payments and zero interest for repairs over $199. Give us a call or stop by, we're here to help!