That’s too soon for most people to come up with the cash, however, and most payday loans are rolled over, which leads to mounting interest and a dangerous cycle of debt. It is intended for the borrower to repay it from their next paycheck. Like a title loan, a payday loan is a no-credit-check, small-dollar, short-term loan. Title loans are risky and should only be considered if alternative options aren’t available. What’s more, the Consumer Financial Protection Bureau found that one-in-five title loan borrowers have their vehicles repossessed for default. These small loans must be repaid in a relatively short period of time, and they can come with triple-digit interest rates. If you’ve paid off your car in full and need to finance a repair, you can take out a title loan, which is typically a no-credit-check loan secured by the title of your vehicle. No-credit-check auto repair loans are often called installment loans. While the lowest interest rates are reserved for creditworthy customers, it’s possible to get a personal loan with fair credit or even no credit. However, most personal loans are unsecured, which means they don’t require you to put forth collateral. When you take out a personal loan that is secured by your vehicle, it is often called an auto equity loan. Personal loans can be used for almost any purpose, including auto repair. Before you start shopping for loans, you should check your credit report at to see where you stand. What are my options for auto repair financing?ĭepending on your creditworthiness, you may have several options for financing your car repair. But there are other ways to finance an auto repair, even if you have bad credit. So what should you do if you can’t afford to fix your car? If you can borrow from friends and family, that will likely be your safest and most affordable option. Furthermore, public transit systems have certainly lost appeal in the era of social distancing. Ninety-one percent of workers drive a car to get to work, and while alternatives are available in some cities, options are limited in others. If that’s the case, you won’t be prepared for a surprise vehicle expense.īut if your car becomes undriveable due to a necessary repair, you could lose access to your income. And if you’re like 63% of Americans, you’ve been living paycheck to paycheck since the pandemic hit the United States last year. Even before the current economic downturn, 37% of Americans would have had difficulty coming up with the cash for a $400 emergency expense, according to the Federal Reserve. Routine maintenance aside, you might incur damage to your vehicle not covered by your insurance policy, or you might have an unaffordable deductible. While you can build these costs into your budget, it’s not unusual for a car repair to come as a surprise. That includes costs like fuel, insurance premiums, and (you guessed it) repairs. The average cost to own and operate a car that's driven 15,000 miles annually is $9,282 per year, according to a report from AAA. But owning a car has ongoing costs beyond auto loan repayment, and it can be difficult for many Americans to keep up with those expenses. Owning a car is often considered a component of the American Dream, and it’s also necessary to get around in many areas throughout the United States.
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