When your car breaks down and you have bad credit, getting the money for repairs can be challenging. However, there are still options available for car repair loans for bad credit that can help get you back on the road. This guide will explore the various loan types, lenders, and alternatives to consider when you need auto repairs but have poor credit.
Car repair loans for bad credit are personal loans specifically designed for individuals with low credit scores who need to finance auto repairs. These loans typically have:
While the rates and terms may not be ideal, these loans can provide a lifeline when you urgently need car repairs but lack the cash or credit to pay for them outright.
There are several loan options to consider for auto repairs if you have bad credit:
Many online lenders specialize in bad credit personal loans that can be used for car repairs. These typically offer:
Some credit unions offer small personal loans or auto repair loans to members with poor credit. Benefits can include:
Many auto repair shops partner with lenders to offer on-the-spot financing. This can be convenient but watch out for high interest rates.
Some BNPL providers like Affirm now offer financing specifically for auto repairs, often with 0% APR options for shorter terms.
Here are some of the best lenders to consider for car repair loans for bad credit:
| Lender | Min. Credit Score | Loan Amounts | APR Range |
|---|---|---|---|
| Avant | 550 | $2,000 - $35,000 | 9.95% - 35.99% |
| Upgrade | 560 | $1,000 - $50,000 | 7.96% - 35.97% |
| Upstart | 300 | $1,000 - $50,000 | 5.60% - 35.99% |
| LendingPoint | 585 | $2,000 - $36,500 | 7.99% - 35.99% |
According to Experian, while many lenders prefer credit scores of 670+, some work with scores as low as 550 or even 300 in some cases.
Follow these tips to improve your chances of qualifying for an auto repair loan with poor credit:
Review your credit reports for any errors that may be dragging down your score. Dispute any inaccuracies you find.
If you have some time before needing the loan, try to boost your credit by:
Having a cosigner with good credit can significantly improve your chances of approval and help you qualify for better rates.
Showing steady employment and income can help offset a low credit score. Be prepared to provide pay stubs, tax returns, etc.
Offering collateral like your car title can make lenders more willing to work with bad credit.
Compare offers from multiple lenders to find the best rates and terms you can qualify for.
If you're unable to qualify for a car repair loan with bad credit, here are some other options to consider:
If possible, try to set aside money each month to build up an emergency fund for car repairs.
Some repair shops offer in-house payment plans, allowing you to pay off the repairs over time.
A 0% APR credit card could allow you to finance repairs interest-free for a promotional period. Be cautious with high-interest cards though.
Check if your city or state offers any programs to help low-income individuals with car repairs.
While not ideal, borrowing from people you know could be an option if you're in a bind.
Consider selling things you don't need to raise cash for repairs.
Consider these advantages and disadvantages before taking out an auto repair loan with bad credit:
If you do take out a car repair loan with bad credit, here are some tips to manage it effectively:
Factor in your new monthly payment and adjust your budget accordingly.
Make all payments on time to avoid penalties and help rebuild credit faster.
If you improve your credit over time, look into refinancing for a lower rate.
Potential fees can add up quickly, so read the loan terms carefully and ask about them upfront.
Common mistakes people make when using car repair loans for bad credit:
Failing to compare offers can mean paying higher interest rates and fees than necessary.
Focus too much on monthly payments instead of looking at the overall cost of borrowing over time.
Taking out a loan every time something breaks can trap you in debt and prevent saving for future needs.
Carefully evaluate each repair recommendation to avoid overspending on things that aren't truly necessary.
While car repair loans can provide a lifeline for those in need, they should be used wisely. Assess your situation carefully and weigh all options before committing to any financing plan. By taking control of your credit and finances now, you'll put yourself in better position for the future.