Anyone who’s owned a car long enough knows how frustrating car problems can be. Car problems are one primary issue that frequently comes up unannounced, making them even more frustrating.
More so, it’s even worse when you have little to no money and bad credit. If you’ve been or are currently in this situation, you should know how this feels.
Finding financing options for your bad car when you have bad credit can be a drag. Thankfully, there’s a way out – you can quickly get a loan to help you get your car back on the road.
To help you do that, we’ll explore numerous online loan options like HonestLoans, tailored for those with bad credit. This will include peer-to-peer lending platforms, online personal loans, credit unions, car repair financing options, and cosigner loans. No matter your credit score, there are loans for bad credit on this page for you.
Let’s take a closer look at the options available to get you back behind the wheel in no time.
Table of Contents
What is a Bad Credit for Car Repair?
A credit score in the mid-600s or lower is generally considered bad for a car loan. According to Experian, a credit reporting company, about one in six auto loan borrowers in 2021 had credit scores below 601.
When giving out an auto loan, lenders consider your credit score and factors such as payment history, steady income, employment length, debt, and loan amount. So, even if your credit score falls into the “bad” tier or lower, you may still be able to get approved for a car loan if other factors are in your favour. However, you may face more restrictions, such as a shorter loan term, from the lender.
There are many forms of lenders or broker that offer bad credit car loans – a great example is HonestLoans. When you have bad credit, applying to multiple lenders is necessary because the requirements and willingness to work with you may vary. By applying to numerous lenders, you can compare offers and choose the one with the lowest rate.
Banks and credit unions, known as direct lenders, are an excellent place to start. If you have accounts in good standing with these institutions, they may be more willing to work with you. Another option is online loan marketplaces such as HonestLoans, which work with a network of lenders.
Several loans for bad credit are available, and we will discuss ways to get them shortly. But first, let’s look at the financial obligations of car repairs.
The Financial Responsibility of Car Repairs
Car repairs can be expensive, so it is crucial to understand your financial responsibilities before getting your car repaired. This also includes knowing the kind of car repair loans you could get on bad credit.
Some of the financial responsibilities that you may have when getting your car repaired include the following:
Paying for the cost of parts
Depending on the type of repair, you may need to pay for the parts required to fix your car. These can include things like replacement tires, brake pads, or engine parts
Paying for labour costs
In addition to the cost of parts, you will also need to pay for the labour costs associated with repairing your car. This includes the cost of the mechanic’s time and expertise.
Paying for any additional services
Some car repair shops may offer additional services, such as car rental or towing, which may be additional charges that you will need to pay for.
Understanding all the costs associated with car repairs is essential before getting work done on your car. This will help you to take the right loan for the repair and ensure that you are prepared to pay for the work that needs to be done.
Methods of Obtaining Bad Credit Online Loans for Your Car Repairs
If you have bad credit, getting a loan for car repairs can be difficult. However, there are still loaning options available to you. Here are some ways to get bad credit online loans for your car repairs.
Peer-to-peer lending platforms
Peer-to-peer (P2P) lending platforms connect borrowers with individual investors willing to lend money. These platforms often have more lenient credit requirements than traditional lenders and may be more likely to approve loans for those with bad credit.
Online personal loans
Online personal loans are another option for those with bad credit. These loans are unsecured, meaning you don’t have to put up collateral like a car or house to get approved. However, interest rates on personal loans for bad credit may be higher than those for borrowers with good credit.
Credit unions are independent non-profit financial establishments owned and controlled by their members. They can be more willing to work with individuals with bad credit and offer lower interest rates than traditional lenders. However, this is not a guarantee, as numerous credit unions only listen to loan requests with good credit scores.
Car repair financing
Some auto repair shops offer financing options for car repairs. These financing options may be more flexible and have lower interest rates than traditional loans. However, it’s essential to carefully review these financing options’ terms and conditions to ensure you understand any fees or interest rates that may apply.
If you have a friend or family member with good credit who is willing to cosign a loan for you, you can get a loan with a lower interest rate. Keep in mind that whoever’s designing the loan will be held as responsible as you are if payments are defaulted.
Short-term loans, which could also classify as payday loans, are designed for people with bad credit who need immediate financial assistance. These loans allow you to borrow a wide range of amounts, including for car repairs, but it is important to be aware that the annual percentage rates (APRs) for these loans are often over 300%.\
This can make payday loans expensive and may lead to a cycle of debt. Therefore, it is wise to consider alternative options for financing car repairs before taking out a payday loan.
What Repairs Can I Use These Loans For?
Some common car repairs that a loan may be used for include fixing a blown transmission, repairing a head gasket, replacing a camshaft, repairing or replacing a fuel injector, or replacing lost car keys. It is a good idea to shop around and compare estimates from different mechanics to find the best price for labour and parts. Don’t be afraid to ask for discounts and ensure you get the best deal.
It’s essential to carefully consider the terms and conditions of any auto loan before you agree to it. Ensure you understand the interest rate, fees, and repayment terms and that you are comfortable with the payments you will have to make. It may also be a good idea to shop around and compare offers from multiple lenders to find the best option for you.