Cheap car repair loans

Having a vehicle in need of repair after an accident or break down can happen to the best of us. But no one plans for their car to need urgent repairs, and, depending on the type of repairs, costs can climb from hundreds to thousands of dollars. 

So, what are your options when you need car repairs but cannot afford them upfront? This is where a car repair loan may come in handy. With a range of competitive options from Australian personal loan lenders for a multitude of financial situations, you may be able to cruise the open road sooner than expected.

It's no secret that car repairs can be expensive, and no one wants to cut corners when it comes to the reliability of their vehicle. Personal loans for car repair, also known as auto repair loans, may be able to help cover these repair costs.

This type of personal loan is designed to help Aussie drivers get back on the road by providing the borrower with a loan sum that they can then pay the mechanic and/or auto body shop. The personal loan is then to be repaid over a set loan term at a chosen interest rate, generally fixed or variable.  

The loan amount you require will depend on the type and severity of replacements and repairs your vehicle needs. This means that an emergency car repair loan may start from anywhere from a few hundred dollars for a small loan, to thousands of dollars for a medium loan, to tens of thousands of dollars for a large loan.

Much like any other type of personal loan, the borrower will need to meet certain eligibility criteria to receive loan approval. This may include meeting income minimums or having a very good to excellent credit score.  

There are a range of Australian lenders who offer personal loan deals for car repair, so it’s best to perform a personal loan comparison and compare loan options for your financial situation.

A car repair loan may be able to assist the borrower in paying for any of the following common vehicle costs, and much more:

• Engine repairs
• Body repairs
• Gearbox or transmission repairs
• Electrical repairs
• Suspension
• Radiator
• New tyres
• Fuel system
• Breaks
• Car registration

Much like a standard personal loan, a car repair loan offers standard features, including: 

• Interest rate – Arguably one of the biggest costs of a personal loan, an interest rate is the rate of interest the lender charges on top of your loan amount. If you’re hoping to find a cheap car repair loan, keeping interest rates low may be able to help.
• Repayment type – Choose between a fixed interest rate, in which the rate will not change for the duration of the loan, or a variable interest rate which is subject to market fluctuation – both good and bad.
• Repayment frequency - Choose your payment plan options and pay weekly, fortnightly or monthly.
• Fees – There are a range of fees a personal loan lender may charge, including establishment fees, monthly fees, and annual fees.
• Loan term – The set period you agree to repay a personal loan.  A short-term loan may be 1-3 years, and a long-term loan may be 4-5 years.
• Secured or unsecured – Borrowers may choose to secure the loan against an asset, such as the vehicle, to increase your likelihood of loan approval or being offered a lower interest rate. If you were to default on the loan the asset would be seized. Comparatively, unsecured loans do not require the borrower to offer up an asset as security, but due to the greater risk posed to the lender, they generally may come with higher rates and fees.

It’s worth weighing up the benefits and disadvantages of a car repair loan before you consider applying.

One of the main benefits of a car repair personal loan is that it may be a handy way to pay for your vehicle repair service and get back on the road quickly. This can be particularly useful for those who use their vehicle for business purposes or drive long commutes every day and cannot afford to be off the road.

Personal loans also tend to have lower interest rates than credit cards on average, so the cost may be lower than trying to pay for repair services on your card. However, if you’re the type of cardholder who always pays their balance in full each statement period, this may not be applicable.

On the other hand, you will still need to apply and be approved for the personal loan before you can use these funds on car repairs. The loan application process can take a bit of time and organising, including providing the lender with personal identification, bank statements and waiting for a credit check. With online applications offered by most lenders, this process may only take 15 minutes. But it may still take several business days from indication of need of repairs to getting the funds in your bank account.

You will need to meet the eligibility criteria of the lender to be approved for the loan, and if you struggle with bad credit this may unfortunately hurt your chances. If you struggle with a poor credit history, it may be worth boosting your credit score before you apply.