Ideally, this is what you would do to pay for your emergency car repair. In a perfect world, you would have an emergency savings account that you could tap to pay for your repairs.If you have such a savings, problem solved. If not, you should start a savings account just as soon as you finish paying for your repair.
Ideally, this emergency savings should contain enough money to pay for 6 months of your expenses. So, if your monthly bills are 3000 dollars, your account should have 18,000 dollars in it. This sounds like a lot, but start building it slow and you can reach this goal. To do that, adjust your budget so that you can contribute money out of every check. This might mean making some big cuts, but sometimes sacrifices must be made.
Anyway, enough of that, you still have a car repair that needs to be made, so let’s find another way.
2. Vendor Financing
Many auto repair shops offer in house financing for repairs. Sometimes they offer their own financing but more often than not, it is a third party finance company.
The great thing about in house financing is that they often feature money saving deals. It could be a period of low or even zero interest. Use caution though, especially with zero interest deals because many times interest will still accrue. If this is the case, you could get charged the interest if you do not pay off the balance in a set amount of months.
Another concern with in house financing is the “mechanics lien”. If you fail to make your payments, the vendor may actually have the right to seize your vehicle and sell it to recoup their money.
3. Auto Repair Credit Card
If you have decent credit, you can get an auto repair credit card from a company like Synchrony. These cards can be used at many participating locations and they work just like a standard credit card with an additional perk, promotional offers.
These promotional offers could save you hundreds of dollars in interest but they come with the same catch that many vendor financing offers do. If you do not pay off the balance in the set time period, you may be charged back all of the interest you have saved. In addition, that interest will likely be a high “default rate” of as high as 29 percent.
4. Credit Card
Next on the list is a good old fashioned credit card. Simply lay down the plastic and your problem is solved.
Of course, you will now likely have thousands of dollars in credit card debt, so, once the repair is made, you will need to come up with a plan to pay off this credit card and any other ones that you have outstanding balances on. Credit card interest is just too high to carry.
If you need motivation to get your debt paid down, look at a method like the Debt Snowball method. In this method you take all of your cards and pay the minimum on all of them except the one with the lowest balance. Pay as much as you can on this one until it is paid off. The idea is that it is very rewarding to have a paid off card and you will continue your work.
Are you logic base? If so, you instead might prefer the Debt Avalanche method. In this case you will pay the minimum on all cards except the one with the highest interest. Pay as much as you can on this one. The idea here is that you maximize your money by paying off the costliest card first.
5. Online Loans
If your credit is not as good as you would like, consider an online loan to get the money that you need. We can even help you get an offer whether you need $500 or need $5000. The catch, and there always is one, is that if you have bad credit, the terms of the loan offer may not be favorable.
Before you accept a online loan be sure to think things through. Put the payment into your budget and make sure that you can afford it. Then, consider whether you have any other more affordable sources of money that you can use to fund your auto repair. This could be borrowing from family or even selling some of your personal property.
6. Trade Your Car In
Last but not least, consider trading your vehicle in. Add in the value of your vehicle plus the cost of your repair and then find out what a dealer would give you for it. It is likely that you would not lose much more money by trading it in to a dealer and you could reap some other benefits.
The biggest benefit could be moving into a vehicle that would now have a warranty. No more worrying about what is going to break on your car next. Auto repairs can be extremely expensive and once things start breaking, they are likely to continue breaking.