Car Repair Loans For Bad Credit

Updated: March 22, 2024 Author:

Key takeaways: Car repair loans can get you back on the road quickly. They’re useful for a variety of different car repairs from accident damage to tyre replacement. It is possible to secure a car repair loan with bad credit but you must make sure you can make the monthly repayments. Defaulting on a car repair loan can negatively impact your credit rating and late payments will come with penalties. 

    What is a car repair loan?

    A car repair loan works similarly to a personal loan in that you borrow a sum of money and repay it over an agreed amount of time with interest. The timeframe for repayment will depend on the amount you borrow. For example smaller loans will typically be paid back within a few months whereas a larger loan could be spread over a number of years.

    With a car repair loan, you can pay for repairs upfront so you’re not left without a car or money for the rest of the month. A car repair loan can be used to cover anything from repairing damage from an accident to getting new tyres. The amount you can borrow will depend on your credit score.

    What are the advantages of a car repair loan?

    Considering how unpredictable cars can be, meaning car repairs are always an inconvenience, a car repair loan can be a great lifeline for getting you back on the road. If you don’t have savings to cover the repairs then a car repair loan can help and it is possible to secure a car repair loan even with bad credit. With a car repair loan, you spread the cost instead of having to deal with a lump sum whilst getting your car back to you as quickly as possible. 

    Here are three advantages to taking out a car repair loan:

    • Fixed payments help you budget: The monthly amount you have to pay back will be fixed and you’ll know prior to agreeing to the loan how much you’ll be paying back and how long for. While car repair loans come with added interest, spreading the cost over a fixed amount of time can help you budget better and leave you with money for all the other monthly essentials. 
    • Gets you back on the road: Your car has to be safe to drive and many people rely on their vehicles for work and for family life. Being without a car can be a real hindrance to daily life but with a car repair loan, you can arrange the repairs quickly and get back on the road as soon as possible. Being landed with a car repair bill can feel like a catch-22 situation – you need money to pay for the car but without it getting to work and earning said money would be extremely difficult. A car repair loan can ease these worries.
    • Quick and easy to secure a loan: Getting a car repair loan is often a quick process even for those with a bad credit score. Many lenders will carry out a soft check first so you’ll know how likely it is that you’ll be approved for a car repair loan and a soft check has no impact on your credit score.

    Can you get a car repair loan with bad credit?

    It is possible to get a car repair loan even with bad credit but there are a few things to keep in mind. Having a higher credit score will make securing a loan easier but there are still options available to you if you have a bad credit rating.

    The main downside to having bad credit when seeking a car repair loan is that you’ll often be placed on a higher interest rate meaning you’ll end up paying more back. If you’re comfortable with the monthly repayments though then being able to get your car back fast and spread the cost can offset this disadvantage.

    Some lenders will specialise in giving car repair loans to those with bad credit but short term loans can incur huge interest rates so it’s always best to do some research and find a lender with lower rates. 

    If you have bad credit and you’re worried about whether you’ll get approved for a loan some lenders will carry out a soft check first. A soft check is only visible to you and not to others who may search your credit report. A soft check can tell you how likely you are to get approved for a loan before you even apply. It’s important to remember that if a lender does accept your application then a hard check will be carried out and this will be visible on your credit report. 

    What are the disadvantages of a car repair loan?

    It’s important to factor in the disadvantages when deciding whether to take out a car repair loan. 

    Here are three reasons why a car repair loan may not be the best option for you:

    • High interest rates: Factors such as short-term loans and a bad credit rating can make interest rates high so you could end up repaying a lot of money.
    • Penalties for missed payments: If you have a late or missed payment many lenders will likely place penalties on you meaning you’ll have to pay even more money than what you originally borrowed.
    • Damage to your credit score: A car repair loan will show up on your credit score so if you default on the loan it will have a serious impact on your credit rating. 

    Are there alternatives to a car repair loan?

    A car repair loan isn’t the only option if you’ve found yourself short on money to fix your vehicle. There are other options to consider that could be better for you financially. 

    Pay later finance is offered by a lot of national auto centres (although you’re highly unlikely to find this at independent garages). This means that they will offer you a short-term credit option to pay for the repairs. These can be interest free over a short period of time but larger loans will come with interest. This option is more widely available to those with good credit.

    Using a 0% credit card is another alternative to a car repair loan. New credit cards often come with a 0% interest offer for the first 12 months so if you can pay off the repairs in that time it’s an option worth considering. However, once the 12 months are up you could be hit with high interest rates.