Skip to Content

Auto Repair Loan + Bad Credit

Almost every car owner experiences a time when during their possession of a vehicle, an accident or event happens and causes you to pay for car repairs. If you ever personally experienced the need to pay for car repairs, you have probably noticed just how expensive car repairs can be. They can easily reach heights of hundreds or thousands of dollars, very quickly. So what do you do when you need an auto repair loan with bad credit?

I bought a Jeep Wrangler and within a month, it was totally unusable. And guess what…? Three different quotes put me at $7,000 to get back on the road.


auto repair loan with bad credit
Me and my girl Grey

If you’re like most people, you probably don’t have any money set aside to pay for these expenses. With today’s economy, even with car insurance companies paying for a large portion of repairs, you are still in charge of paying for your deductible. Most of the time, your deductible is requested upfront before any repairs begin, meaning you are now left to scramble for the cash if you want to fix your ride.

In 2015, AAA published the results of a study held, showing that 1 in 3 American drivers can’t afford to pay for car repairs without going into debt and will choose to put off the necessary maintenance for their vehicles. The study also showed that these roadside breakdowns could have easily been prevented if the proper care was taken. 

With 1 in 4 unable to pay a repair bill of $2000 or greater and 1 in 8 unable to pay for a repair of $1,000 or greater, you might find that had they paid for the necessary maintenance some repair costs could have been taken care of.

Of course, this doesn’t cover unexpected accidents with a vehicle. You can never prepare for an on-road accident with another driver, but you will still have to foot your portion of the repair bill or deductible.

Car repairs can be frustrating and stressful

This is especially true if you do not have the money set aside for these expenses. Not only do you find yourself with a broken car in need of repairs, but you also find out that you can’t afford to pay for the full cost of the repair bill.

With moments like this happening all of the time, you would think that more people would set up an emergency fund for such occasions. But what do you do when you don’t have the proper savings in place? 

How can you get an auto repair loan with bad credit?

Your options:

While it may not feel like it, you actually have several options available to you when you are paying for expensive auto repairs. 

You can:

  • Pay what you can in cash
  • Put some (or all) of the bill on a credit card – this one is risky and will cost a lot in interest rates.
  • You can take out a personal loan.
    • If you have good credit, you can simply do this at your bank. Requesting a secured loan could be a great option if you have both good credit and a long term relationship with your bank.
    • Bad credit folks aren’t as lucky because the loans would be considered “high risk,” which causes them to have a much more difficult application process.

There are two types of auto repair loans that you can try and qualify for. A secured loan and an unsecured loan.

An unsecured loan is done by having the lender run a soft credit check to determine how much you can qualify for. This usually doesn’t affect your credit score and depending on your credit score, you could be able to get more than the value of the vehicle.

For somebody with bad credit, it may be better to get a secured auto repair loan. 

A secured auto loan is different than a personal loan because it is considered “secured” because the money that is being loaned to you is actually being invested into an asset (your car). Because of this, your loan value will not exceed the blue book value of your car. 

As collateral for the loan, you have to give up the title for your car. This means that if you default on your payments or break the contracted terms and agreement, you will be giving up your vehicle. 

Normally, an auto repair loan doesn’t carry as high of an interest rate as an unsecured personal loan or a credit card would. Not only that, but they would give you about 24 months or longer to pay off the balance. Just make sure that you pay off the balance and don’t miss payments so that you can get your car’s title back!

While there is a little risk with possibly losing your vehicle, auto repair loans are great for covering most repairs. You can easily get up to $2,000 from a car repair loan, some places may even offer up to $10,000 depending on your vehicle and the amount of damage that is done. With most auto repairs costing less than this amount, you can usually expect that you can pay these small loans off within a year. Any cash you currently have on hand can be used to supplement the loan and have you borrowing/paying even less.

What to do before applying for an auto repair loan?

The first thing that you should do is determine what the absolute lowest amount of money that you will need to borrow is. When you know this amount, you’ll be able to compare different lenders and check through their loan agreements to find the best interest rates, terms, and conditions.

The second thing that you will need to do is check to make sure that you are given ample time to repay the loan. Remember to factor in the interest rates and what your monthly minimum payments would be over an extended period of time. Most of the time, a major car accident repair loan is broken up into about 24 monthly installment prices. A lot of that will be interest rates, and if you can pay it off sooner rather than later, you can have a lot more money in your pocket.

Auto Repair Loan Calculator

It should go without saying that you should try to look for the places with the lowest interest rates. By choosing to have low-interest rates, your monthly payments can actually go towards the principal of your balance instead of just paying the interest. Not only that, but the monthly payments will probably be smaller, allowing you to have less financial strain to pay them on time. Making monthly loan payments without skipping any or being late will look really good on your credit.

auto repair loan with bad credit

Another thing that you should consider before requesting an auto repair loan is the value of your vehicle

Especially if you’re looking for an auto repair loan with bad credit. Depending on the amount of damage done to your vehicle, it may just be easier to accept the cash settlement from your auto insurance. If your vehicle is totaled out, you’ll get the blue book value and if you’re really lucky it can be enough to cover the cost of a new (used) vehicle. 

If the blue book value of your vehicle is less than the estimated costs of repairing your vehicle, you should definitely take the money and try to find a cheaper vehicle. There is no point in trying to fix something that will cost more than it’s worth.

How to find a good deal on auto repairs

With 86% of Americans driving their vehicle to work every day, it makes sense that you’d want to get your car up and running as quickly as possible so that you can return to your normal routine. But don’t be in such a rush that you forget to do your homework when choosing a mechanic or repair shop to fix your ride. 

Unfortunately, the phrase “you get what you pay for” can be applied here as cheap mechanics may give cheap results, thereby costing you more in the long run. Finding a reputable shop and reading customer reviews can save you from unnecessary headaches and possibly save you money.

Here are 3 tips to help you find a good mechanic:

  1. Get a minimum of 3 cost estimates.
    1. Go to 3 different places, or have someone come out to you and provide you with a written estimate that shows exactly what will be covered, how much it will cost and an estimated timeframe for how long the repairs would take.
  2. Ask for legitimate discounts. 
    1. Coupons or Groupons can be found online and are worth seeking out if it can help to stretch your budget. Even if you can’t find any advertised discounts, don’t be afraid to ask for one. You may qualify for a deal  that you would otherwise be unaware of.
  3. Look for a technical school
    1. If you’re really in a tight spot for money and want your car repaired, consider letting students at a technical school work on it. They need the experience, and they have a trained professional overseeing everything. This means that you can save money and get good quality service provided while helping to further a students education. Win-win.

Once you find a good mechanic and know the costs and timeframes of your vehicle’s repair you can proceed with the auto repair loan and getting your vehicle fixed.

Remember to double-check the loan stipulations

Make sure you completely understand what your auto repair loan will and will not cover. Some may have special clauses that will have you wishing you had read them before.

Some repair loans will cover the bare minimum to keep your car running while others might allow for more cosmetic-type repairs to happen.

The bottom line is that you need to make sure that your car is in tip-top running shape, you will need to do a lot of homework with these loan lenders and make sure that you thoroughly understand what will be covered and how much it will cost.

With an auto repair loan, you can be safely on the road again, in no time.

Screen Shot 2016-07-19 at 7.31.04 PM
auto repair loan with bad credit

katrina Kroeplin

Wednesday 2nd of October 2019

double checking all terms is so important. i haven't had to take a loan for auto repairs, but i'm glad it's out there just incase i ever have to. they can be so expensive.


Wednesday 2nd of October 2019

This is such a great resource for so many! Auto repairs are costly and a major inconvenience when they are needed without notice.

Claudia Krusch

Wednesday 2nd of October 2019

Our cars are paid off and are not new so I know the cost of repairs so well! Loved your post and can't wait to use your tips next time we need repair!

Celebrate Woman Today

Wednesday 2nd of October 2019

Very few people know that such loans can be made. I didn't. Now, let's spread the word.


Wednesday 2nd of October 2019

Cars can be so tricky and SO expensive. This is helpful for those who need it!

Comments are closed.

This site uses Akismet to reduce spam. Learn how your comment data is processed.