man underneath car repairing

Auto Repair Financing: Options And Alternatives To Consider

Andrew Dehan7-Minute Read
UPDATED: March 07, 2023


Lots of costs are involved with owning a car, and one of the most dreaded is the bill for an expensive emergency repair job. Even worse is when the maintenance or damage isn’t covered by your warranty or insurance. Unless you have a second vehicle at home that you can use in the meantime, you may need the cash for the repair on hand immediately.

Fortunately, you have options. Auto repair loans exist to lend you the cash you need to get your car back on the road pronto. Let’s take a look at 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 financing that allows you to pay for vehicle repair costs. Car repair financing can be secured or unsecured and may come with high interest rates and short repayment terms, but these variables will largely depend on the payment option you choose.

Apply For A Personal Loan.

Explore your options today and see what's possible in one simple click.

Types Of Auto Repair Financing

Before you go shopping for auto repair loans, 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 sure the repairs aren’t insured and you’ve reached a final cost estimate, it’s time to review your loan options.

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

Loans For Car Repair

Minimum Credit Score

Average Repayment Terms

Average APR

Personal loan

560 – 670 (varies by lender)

12 – 60 months

4% – 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 to pay for auto repair jobs. 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.

Pay attention to the terms of your personal loan, which can include the following information:

  • Loan type: There are two types of personal loans: secured and unsecured. If your loan is secured, you’ve put something up as collateral to “secure” the loan. In this scenario, you might put the car itself up as collateral, but it can be anything of similar or equal value.
  • Principal loan amount: Your principal details the amount of money being borrowed and the amount owed before fees and interest.
  • Additional fees: You may owe 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, like the ones mentioned above.
  • Repayment period: 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.

Personal loans can give you cash quickly – within a week or even a few business days – and offer fixed rates so you’ll be paying the same amount every month. Because of personal loans’ shorter terms and the fact that these loans are unsecured, the monthly payment and interest rate may be higher than with secured long-term loans. On the brighter side, this just means you can pay your loan back more quickly.

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 fast, but they come with a number of 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, perhaps 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 that you meet 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 can enjoy a 0% interest APR introductory period for up to 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.

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 almost any 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. If you’re applying for a personal loan, you may also need to present your bank account information, pay stubs, tax forms and bank statements.

Once the process is complete, you should receive your funds.

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, including Rocket Loans, don’t allow co-signers.

Final Thoughts: Get Back On The Road With Auto Repair Financing

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, you have your choice of auto repair financing options.

If an unsecured personal loan sounds right for you, you can apply today with Rocket Loans and get those auto repairs started.

Apply For A Personal Loan.

Explore your options today and see what's possible in one simple click.

Andrew Dehan

Andrew Dehan is a professional writer who writes about real estate and homeownership. He is also a published poet, musician and nature-lover. He lives in metro Detroit with his wife, daughter and dogs.