Can I get a loan for car repairs?
If you've ever had a car accident, failed your MOT or had your car vandalised, you'll know that vehicle repairs are often costly.
Auto repairs not only leave a hole in your pocket but are often an unforeseen expense that needs urgent attention and quick access to funds.
Fortunately, car repair financing to fix your vehicle is possible with a car repair loan.
What is a car repair loan?
A car repair loan helps finance the cost of repairing damage to your car.
Car repair finance enables you to pay upfront for repairs or maintenance bills and spreads the cost, so you're not left short for the month or without your wheels.
An auto repair loan can be used to pay for things like:
- Accident damage
- MOT repairs
- Body repairs and painting
- New accessories & parts
- New tyres
How do car repair loans work?
Car repair financing works like a personal loan to fix your car. As with other loans, you'll borrow a sum of money and repay it over an agreed time period with added interest.
The size of your car repair loan will determine your repayment terms. For example, a short-term car repair loan for £200 will typically get repaid over several months, but the repayment term on an auto loan for £5,000 could be over a number of years.
Lenders' interest rates vary, and car repair loans for bad credit often have higher interest rates, so you should compare lenders to get the best rates before you apply.
Can I pay monthly for car repairs?
Yes, most car repair loans require you to repay your loan in monthly instalments.
Your lender will arrange for repayments to take place automatically by Direct Debit to reduce the chance of late or missed payments. For most lenders, you'll need a bank account and evidence that you can afford to repay the loan.
How much can I borrow to repair my car?
Most car repair financing companies offer loans between £500 and £5,000. However, some lenders specialise in short-term car repair loans and may let you borrow as little as £100.
Beware of short-term, high-cost car repair loans because they often come with eye-wateringly high interest rates and extra charges, which could mean the loan will cost you almost double the amount you've borrowed.
Where can I get a car repair loan?
You can arrange a car repair loan online with a direct lender or compare your options using a loan broker.
A quick internet search will result in a choice of online lenders, loan brokers and comparison websites specialising in car repair loans.
Comparison websites are often an ideal starting point because they'll only show regulated lenders, and you can use filters to narrow your search and sort your results.
Can I get a car repair loan with bad credit?
Yes, you can, but car repair loans for bad credit often come with a higher annual percentage rate (APR), meaning the loan will cost you more.
Some loan companies specialise in car repair loans for people with bad credit or poor credit ratings but steer clear of short-term, high-cost lenders if possible.
If you have bad credit and are unsure where to start, some loan brokers can check your eligibility without leaving a hard credit check on your credit record visible to other lenders. Loan brokers may also be able to access a broader range of specialist bad credit lenders.
What are the pros and cons of car repair loans?
A car repair loan can be a lifeline if you find yourself with a hefty garage repair bill and rely on your car for work or getting your family from A to B.
Car repair finance can be a real advantage if you need funds quickly but don't have savings or friends and family to turn to when speedy car repairs are essential.
However, borrowing has disadvantages, so you should carefully weigh the pros and cons before taking out a car repair loan.
- Enables repairs, so you're back on the road quickly
- Spreads the cost of large repair or maintenance bills
- Usually simple and quick to arrange
- Fixed, regular repayments help you budget
- Possible to arrange, even if you have bad credit
- Short-term loans may have very high APRs
- You'll damage your credit score if you default on the loan
- Penalties for late or missed payments could add to the cost
What are the alternatives to car repair loans?
There are several other options to consider if you need a loan to fix your car. Here are the cheapest car repair financing options:
The most common type of loan; this type of finance typically has a lower rate of interest than a credit card or specific car repair loan. Interest rates are fixed, and repayments are made monthly.
Personal loans sometimes come with flexible repayment terms, but the longer you take to repay, the more interest you'll get charged. They're a good option if you have a good credit score and a regular income.
Pay later finance
Many national auto centres offer a short-term, Interest-free, point-of-purchase credit option to pay for car repairs and maintenance.
If you need to spread your repair bill over a longer period of up to 4 years, interest rates tend to be around 20%, so repay within the 0% interest period if possible.
This option is ideal for spreading the cost of fixing your car if you have good credit, but you may be turned down for car repair financing if you have a low credit score.
0% credit cards
This type of payment card allows you to use credit to pay for goods and services like car repairs and pay back what you owe with added interest.
New credit cards often come with an introductory 0% interest rate which means you can borrow up to 12 months for free, but beware of high interest rates once the interest-free period ends.
This is an unsecured loan where someone else guarantees that loan repayments are covered if you default. You may pay a higher interest rate than the brands you see on the highstreet and you'll need a good relationship with your guarantor as they will be responsible if you cannot afford to pay it back.
Car repair loans FAQs
Car repair financing won't affect your credit score if you repay on time and stick to the agreement terms of your loan.
That said, when you apply for a car repair loan, lenders may perform a hard credit search which may leave a mark on your credit record, so avoid making lots of applications because this will reduce your overall score.
If you're worried about impacting your credit score, use a loan broker who can check your eligibility with a soft search which is only visible to you, and find a lender to match your needs before you apply direct.
The good news is, if you can show you're a reliable borrower by making regular, on-time payments, a car repair loan could improve your credit score over time.
The type of information you'll need to apply for a car repair loan depends on the loan company, but typically the information you'll have to supply is:
Proof of age and identity
Proof of UK residence
Proof of income
Bank account details
You'll need to be a UK resident, over 18 and have a current account with the facility to set up a direct debit.
APR is short for Annual Percentage Rate; it shows the overall cost of your loan.
The APR takes into account all costs during the term of the loan, including the interest rate, credit charges and any extra fees.
When you're comparing loans, the APR can be a useful point of comparison. All finance companies have to provide a representative example and tell you the APR of the loan before you sign a credit agreement.