man underneath car repairing

Auto Repair Financing: Options And Alternatives To Consider

Victoria Araj7-Minute Read
UPDATED: December 30, 2023


Owning a car involves juggling a number of costs, and one of the most dreaded ones is the bill for an expensive emergency repair job. Unless your car insurance or car warranty can cover the damage, you may need the cash for the repair on hand immediately. Fortunately, loans for car repairs are available to those who need them and qualify for financing. 

Let’s take a look at some of your auto repair financing options, how they work and any risks involved.

What Is An Auto Repair Loan?

An auto repair loan is a type of loan that allows you to pay for vehicle repair costs. Car repair financing can be secured or unsecured and may come with a high interest rate and short repayment term, but these variables will largely depend on the payment option you choose.

Before you go shopping for an auto repair loan, be sure you’ve contacted your auto insurance company to see if they’ll cover the repairs. You may also want to get a second opinion from another mechanic or negotiate a lower price. Once you’re certain the repairs aren’t insured and you’ve reached a final cost estimate, it’s time to review your loan options.

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Types Of Auto Repair Financing

Here are some common ways to pay for expensive car repairs.

Car Repair Loan

Minimum Credit Score

Average Repayment Terms

Average APR

Personal loan

550 – 670 (varies by lender)

12 – 60 months

5% – 36%

Payday loan

No credit check

2 – 4 weeks

390% – 400%

Title loan

No credit check

15 or 30 days


Personal Loans

You can use a personal loan in a lot of ways, including as a way to pay for an auto repair job. Personal loans are a type of installment loan, meaning you can repay the borrowed loan amount over a period of time in predetermined monthly payments. If you need cash fast, a personal loan can be the way to go.

The terms and conditions of your personal loan will depend in large part on your credit score and debt-to-income ratio (DTI). In general, the higher your score, the better your loan terms will be. Most personal loans will be unsecured, so your credit score and DTI are the main driving force behind your application.

If you’re thinking about getting a personal loan, take some time while shopping around to pay attention to the information discussed next.

  • Eligibility requirements: Lenders vary in their credit score requirements and interest charges, but you’ll generally want a credit score of at least 650 to be eligible for a good rate and term. Prequalify with different lenders to get a better sense of what you’re eligible for.
  • Principal loan amount: Your principal details the amount of money being borrowed and the amount owed before fees and interest. Generally, personal loan amounts range from $1,000 to $50,000. Rocket Loans℠ offers personal loans from $2,000 to $45,000.
  • Additional fees: You may owe upfront processing and origination fees for the loan. Late payments can also mean late fees, and depending on your lender, you could face prepayment penalties for paying your loan back early.
  • Interest rate and APR: Your interest rate – the percentage charged for borrowing the loan – will be influenced significantly by your credit score. The annual percentage rate (APR) will usually be higher than your interest rate and includes additional fees, such as the ones mentioned above.
  • Repayment term: This is the period of time when you can pay back the loan based on the amount of your monthly payments. Personal loan terms are typically 12 – 60 months but sometimes longer.

Approved borrowers should receive their cash in 1 – 7 business days. Make sure to stay on top of your repayment schedule and make at least the minimum monthly payments so you don’t risk your loan going into default.

Payday Loans

You may have heard of payday loans as cash or check advance loans. They’re short-term loans available through private lenders that can get you your cash on the same day as your approval, but these loans carry some risks.

Full loan repayment, plus fees and interest, could be due by your next paycheck. The APR for payday loans is typically around 400%, meaning you’ll owe a lot more than you borrowed in a short amount of time. If you roll over your loan to a future due date, even more interest will pile on.

Unless there’s no other way to get the money you need, it’s probably wise to avoid payday loans.

Title Loans

Like payday loans, car title loans are short-term financing options that require you to exchange your vehicle’s title for the loan. Repayment, plus fees, is usually due 15 or 30 days after the loan is issued. Failure to make that due date can lead to your car being repossessed. You can roll over your payment, but the typical APR for a car title loan is 300%.

Like with payday loans, you may be risking more than you can afford by using a title loan.

Alternatives To Car Repair Loans

If you’re ultimately unable to qualify for a personal loan and you’re wary of the risks associated with payday and title loans, consider some alternative options for financing your car repairs.

Let’s look at a few.

Home Equity Loans And HELOCs

A home equity loan allows you to convert your home’s equity into cash for your needs. Utilizing this method of financing requires that you have enough equity built up, and it also requires meeting the credit and DTI criteria for the loan.

In addition, you’ll have to put your house up as collateral. If something goes wrong when paying back the loan, you could risk losing your house through foreclosure. The other drawback is that it may take weeks for you to receive your money, making this an inconvenient option if time is of the essence.

Slightly different from a home equity loan is a home equity line of credit (HELOC) where you turn your home’s equity into revolving credit that you can draw from and pay back as you would a credit card. Because your home’s equity is involved, you also risk losing your home with this method.

Mechanic Payment Plan

Some mechanics and auto repair shops work with lenders to offer financing options to their customers. This can come in the form of a payment plan or a branded credit card. The card can offer promotions and discounts, as well as little or no interest for a specified introductory period. You’ll be charged a higher interest rate after the introductory period, however, so it’s best to pay back the loan before that period ends.

Credit Card

If you get a new credit card to cover the repairs, you may qualify for a 0% interest APR introductory period for 6 – 21 months. Like with a mechanic payment plan, you can save money by paying off the amount you owe within that period. Otherwise, a high interest rate will kick in and possibly bury you in more debt than you bargained for. Some credit cards may also require annual fees for using their services.

Savings Account

If you’re left with no other options, your auto repair financing may have to come out of your emergency fund. Car repairs may not be what you had in mind for this money, but dipping into extra funds may be your best option if you have no other way to pay.

If your total savings don’t cover the repair bill, paying what you can in cash could lower the amount you need to borrow.

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FAQs About Car Repair Financing

We’ve covered a lot of loan options, but you may still have some questions about auto repair financing. To assist you in your financing search, we’ve answered the following frequently asked questions.

What can auto repair loans cover?

Auto repair loans can cover most maintenance or repairs related to a car or other motor vehicle. New tires, broken windows, oil changes and even transmission replacements can be paid for by auto repair financing. You could even use an auto repair loan to upgrade the features of your vehicle, but we recommend using a loan only for emergency repairs.

How do I apply for auto repair financing?

After you’ve shopped around and compared rates and financing from various lenders and credit unions, you’ll generally go through an application process for the loan of your choice. In addition to submitting an application, you may have to provide documentation with personal information, proof of income and your Social Security number. You may also need to present your bank account information, pay stubs, tax forms and bank statements.

Are there auto repair financing programs available?

There are no programs, per se, to help with auto repair financing, but some companies partner with auto repair shops to offer branded credit cards that assist customers. Talk with your regular mechanic to see if they offer any of these deals.

Can I get an auto repair loan with bad credit?

Types of financing such as title loans and payday loans don’t typically require evaluating credit history, but these options often involve predatory lending practices that are typically best avoided. You may have better luck using a 0% APR credit card that requires a lower credit score. Just make sure you pay off your balance before the promotional period ends.

If your credit score is too low for a personal loan, another option is to have someone co-sign a loan with you. A co-signer can help you get the funds you need even if you have poor credit. Just keep in mind that some lenders and lending platforms, including Rocket Loans, don’t allow co-signers.

Final Thoughts

Owning a car is expensive, and unexpected expenses can come out of nowhere. If you find yourself needing a little help to get your car back on the road, look over your auto repair financing options.

If a personal loan sounds right for you, you can apply today with Rocket Loans and get those auto repairs started. We take pride in our fast turnaround time for loans, and we can often get you funds the same day or by the next business day.*

*Same Day Funding available for clients completing the loan process and signing the Promissory Note by 1:00PM ET on a business day. Also note, the ACH credit will be submitted to your bank the same business day. This may result in same day funding, but results may vary and your bank may have rules that limit our ability to credit your account. We are not responsible for delays which may occur due to incorrect routing number, account number, or errors of your financial institution.

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Victoria Araj

Victoria Araj is a Section Editor for Rocket Mortgage and held roles in mortgage banking, public relations and more in her 15+ years with the company. She holds a bachelor’s degree in journalism with an emphasis in political science from Michigan State University, and a master’s degree in public administration from the University of Michigan.