Car Repair Loans for Bad Credit: Get Your Vehicle Fixed Fast

When your car breaks down unexpectedly, it can put a major strain on your finances – especially if you have bad credit. Fortunately, there are options available for car repair loans for bad credit that can help you get back on the road quickly. In this comprehensive guide, we’ll explore everything you need to know about finding and qualifying for auto repair financing with less-than-perfect credit.

Why Car Repair Loans for Bad Credit Are Important

For many people, having a reliable vehicle is essential for getting to work, taking care of family obligations, and going about daily life. When car troubles strike, it can be incredibly stressful if you don’t have the savings to cover costly repairs. This is where car repair loans for bad credit can be a lifeline.

Some key reasons these loans are so valuable include:

Allowing you to get necessary repairs done immediately
Spreading out the cost of repairs over time through fixed monthly payments
Potentially cheaper than putting repairs on a high-interest credit card
Giving you options even with a low credit score
Helping you avoid missed work or other issues from not having transportation

According to a study by AAA, the average car repair bill ranges from $500 to $600. For major repairs like an engine or transmission replacement, costs can easily climb into the thousands. Without financing options, these unexpected expenses can be devastating for those living paycheck to paycheck.

Types of Car Repair Loans for Bad Credit

There are several different financing options available if you need a car repair loan with bad credit:

Personal Installment Loans

Personal installment loans are a popular choice for auto repairs. These are unsecured loans that you repay in fixed monthly installments over a set term, usually 1-5 years. Many online lenders offer personal loans for people with credit scores as low as 580-600.

Auto Repair Financing

Some auto repair shops and dealerships offer their own financing programs. These may have more lenient credit requirements since they are secured by the repairs being done. However, interest rates tend to be higher than other options.

Credit Card

For smaller repairs, putting the charges on a credit card may be an option. Some cards offer 0% intro APR periods that can give you time to pay off the balance interest-free. But be careful – credit card interest rates are typically very high after any promo period ends.

Payday Alternative Loans

Some credit unions offer payday alternative loans (PALs) as a cheaper alternative to predatory payday loans. These small-dollar loans of $200-$1,000 have capped interest rates and repayment terms of 1-6 months.

How to Get a Car Repair Loan with Bad Credit

While having bad credit makes it more challenging to get approved for a loan, it’s certainly not impossible. Here are some tips for increasing your chances of qualifying for car repair financing with bad credit:

Check Your Credit Report

Before applying, check your credit report for any errors that may be unfairly lowering your score. You can get a free copy of your report from each credit bureau once per year at AnnualCreditReport.com.

Compare Multiple Lenders

Don’t just go with the first lender you find. Shop around and compare offers from at least 3-5 different lenders. Many online lenders let you check your rate with just a soft credit pull that won’t impact your score.

Consider a Cosigner

If you’re having trouble qualifying on your own, see if a friend or family member with better credit would be willing to cosign on the loan. This can help you get approved for better rates and terms.

Provide Collateral

Some lenders may offer secured personal loans that use your car or other asset as collateral. This reduces the lender’s risk and may help you qualify with bad credit.

Improve Your Debt-to-Income Ratio

Paying down existing debts can improve your debt-to-income ratio, making you appear less risky to lenders. Aim to get your DTI below 40% if possible.

Top Lenders for Car Repair Loans with Bad Credit

Here are some of the best lenders to consider for auto repair loans for bad credit:

Lender	Min. Credit Score	Loan Amounts	APR Range
Upgrade	560	$1,000 – $50,000	5.94% – 35.97%
Avant	580	$2,000 – $35,000	9.95% – 35.99%
OneMain Financial	No minimum	$1,500 – $20,000	18.00% – 35.99%
LendingPoint	585	$2,000 – $36,500	7.99% – 35.99%

These lenders specialize in working with borrowers who have less-than-perfect credit. They consider factors beyond just your credit score when evaluating applications.

Pros and Cons of Car Repair Loans for Bad Credit

As with any financial product, there are both advantages and disadvantages to consider with car repair loans for bad credit:

Pros:

Get repairs done quickly without having to save up
Fixed monthly payments make budgeting easier
Build credit by making on-time payments
May be cheaper than high-interest credit cards
Keeps your vehicle operational for work/life needs

Cons:

Higher interest rates than loans for good credit
May require collateral or a cosigner
Risk of default if you can’t make payments
Fees like origination fees can add to the cost
May be tempted to borrow more than you need

Alternatives to Consider

Before taking out a car repair loan with bad credit, it’s worth exploring some alternatives that may be available:

Payment Plans

Some auto repair shops offer in-house payment plans that let you spread out the cost of repairs over time. This can be a good interest-free option if available.

Local Charities/Non-Profits

Check if there are any local organizations in your area that offer assistance with car repairs for low-income individuals. Churches and community centers are good places to inquire.

Friends and Family

Consider asking friends or family if they would be willing to lend you money for the repairs. Be sure to treat it like a real loan with clear repayment terms.

DIY Repairs

If possible, doing some of the repairs yourself can save a lot compared to full-shop prices. Look up tutorials online or at your local library to see what you could fix on your own.

Frequently Asked Questions About Car Repair Loans for Bad Credit

How Much Do Car Repair Loans Cost?

The cost of a car repair loan depends on the lender, loan amount, and your creditworthiness. Interest rates typically range from 5% to 40%. Origination fees are also common.

Can I Get Approved for Bad Credit?

Lenders vary in how flexible they are with credit requirements. Most will approve borrowers with scores as low as the mid-500s, though terms may be less favorable.

What Documentation Do I Need to Apply?

To apply for a car repair loan, you’ll usually need:

A completed application form
Your SSN or ITIN
Proof of income (pay stubs, tax returns)
Bank account information
Past 3 months bank statements
Details about the repairs needed and estimated costs

The Bottom Line on Car Repair Loans for Bad Credit

If you find yourself in need of car repairs but are short on funds, a car repair loan with bad credit can be a viable solution to get back on the road. While these loans come with higher interest rates and fees compared to options available to those with excellent credit, they provide much-needed financial flexibility for many Americans.

The key is shopping around carefully to find the best terms you qualify for based on your situation. By comparing lenders and understanding what factors are considered in underwriting decisions, you can secure financing that won’t break the bank.