There you are having an amazing day and on cloud nine when bam, your car stalls out when driving home from your latest success story. It’s the one piece of news that most Americans loathe the most, a car repair bill.
AAA estimates that this problem costs Americans on average over $1,100 annually and that one-third of Americans were unable to afford a hefty car repair bill.
Read on to find out exactly what you need to do to secure a car repair loan today so that you can create your own success story tomorrow.
Step One: Research Car Repair Loan Process
Whether you are looking for a new television or a car repair loan, you need to do your due diligence and research before handing over the credit card.
You also have to be sure that your repairs are costing what your mechanic is telling you.
You can use the Consumer Protection Bureau Car Repair Estimator to see if the mechanic is trying to give you the squeeze.
Then you will need to decide what type of car repair loan to look for.
You can use a traditional personal loan from a bank, existing credit cards, payday loans, loans from family members, online loans, or sometimes even branded credit cards from your mechanic.
Learn your credit score through credit reporting sites online, and then get your financial information in order.
Step Two: Organize Your Financial Paperwork
If you have a steady job or steady income and can prove it, you will find a loan solution, so long as you have done your research.
Regardless of your credit score, if you have three to six months of bank statements on hand and a steady income, you can show lenders that you are good for the amount.
You also want to have proof of any income you have coming in, including child support, pay stubs, or even bills and invoices of clients or customers if you are self-employed.
At this point, you may be ready to go to a bank or online loan solution.
Step Three: Pick a Car Repair Loan Solution
Now that you know what your financial situation is, you can research options for your loan. Obviously, if you have good credit you have more options, but that doesn’t mean you are guaranteed a loan with good credit.
Sometimes just having a regular income is enough.
This opens the door to payday loans. The caveat to payday loans is that you will usually have to pay it back with your next pay.
If you are okay with that and made that plan anyway, then go this route. Sometimes something like payday alternative loans, or, PALs, are sometimes an option as well.
These go through credit unions and generally have the advantages of lower interest rates and longer terms to pay the loan back.
Another option is to use a credit card. You may want to put it on an existing credit card that you already have, or apply for a new card with low interest but enough of a limit that will pay off the bill.
This will give you a longer time to repay, but you will also have to cover the interest on that bill as well. Sometimes mechanics will offer their own credit card to help.
Step Four: Try to Avoid This
Another common way of getting car repair loans is getting a loan on the title of your car. This is not unlike getting a second mortgage on a home.
That is a secured form of lending where you put your car title up as collateral for the loan.
This is not a good idea unless you are flush with cash in the near future and can pay off the loan. You will give your title to the lender until the loan is paid.
The Consumer Protection Bureau says that four out of five of these loans are renewed on the day they are due because of the inability to pay, and one in five have their cars seized or repossessed because of the inability to pay.
Avoid that trap. You can’t continue your success story if you don’t have wheels to get to it.
Gone are the days where getting a car repair loan was difficult. Today, almost anybody can get one regardless of credit score or history.
Some online loan solutions even offer no credit check loans. You are one step closer to your success story when you apply today for an installment loan based on your income and not your credit score.