A vehicle is a big purchase, and unexpected repairs can cause financial stress. Depending on the repair cost and your ability to pay back the loan, it is essential to research all of your lending options.

From tapping into an emergency savings account to getting a personal loan, there are plenty of solutions that will help you manage this unexpected expense.

Payday Loans

Depending on your lender, payday loans are short-term cash advances that you pay back with your next paycheck. Typically, you’ll need to provide a post-dated check or give the lender permission to withdraw funds from your bank account. Alternatively, you can apply for a credit card that offers a 0% APR introductory period on balance transfers or purchases (though you may have to meet minimum spending requirements).

Some mechanics offer their own car repair financing solutions. These often involve putting the repairs on a credit card, and the card will charge you high interest rates once the introductory period ends. Other options include an unsecured personal loan from a bank or online lender or an auto repair financing option through an e-commerce site like Upgrade. These options typically require a formal application, credit approval and funding, with funds usually arriving in your account within a business day.

If your credit score is below the national average, you might struggle to qualify for a personal loan with a fixed monthly payment or for an auto repair loan from a traditional lending institution. However, you can look for lenders that specialize in offering unsecured personal loans to borrowers with bruised credit or consider asking family members or friends to co-sign the loan.

Title Loans

A title loan allows you to borrow against your car’s value, but the loans carry steep fees and interest rates and if you can’t repay them, your lender can take your vehicle. This financing option should be considered a last resort and it’s important to research your options carefully. In New York, lenders must be licensed to issue these loans and that’s one safeguard against fraudulent activity.

Investopedia Explains Car Repair Loans

You may be able to find cheaper financing options, such as loans from family and friends or a credit union. Also, check whether the repairs you need are covered by your auto insurance or a warranty. If they are, you can save on the cost and avoid high fees and interest rates.

In a March 2023 report, the Consumer Financial Protection Bureau (CFPB) identified several sneaky practices among some title loan lenders. For example, some lenders would split a single quick loans payment into multiple debits from the borrower’s bank account, causing multiple overdraft charges and other problems. Others installed devices known as “kill switches” in borrowers’ vehicles, making it easier to disable the vehicle and seize its parts if they default on the loan.

Line of Credit

While you may think your first option for financing your car repairs is to put them on a credit card, you should be aware of the high interest rates that often come with this strategy. Unless you’re sure you can pay off your debt within the 0% APR period (typically between 6 and 21 months), it’s best to avoid this type of financing.

If you don’t qualify for a personal loan due to credit score or income requirements, many auto repair shops partner with lenders to offer payment plans directly to customers. These plans typically have a lower APR than traditional personal loans, but you will need to meet the lender’s requirements for approval and proof of income.

Another financing option is an unsecured personal loan from a lending company like Upgrade, which offers competitive personal loan rates and a fully digital application process. This type of loan is ideal for those with good to excellent credit, and you can usually receive funds in as little as one business day. Plus, these types of loans are reported to the major credit bureaus, so you can potentially improve your credit score by making on-time payments.

Bank Loans

If your car repair costs are not covered by insurance or a warranty, you can consider a bank loan. This type of financing typically has lower interest rates than payday or title loans and funds arrive in your account more quickly, depending on the lender.

Some mechanics and auto repair shops partner with lenders to offer a payment plan directly to customers. These plans often include a branded credit card with a 0% interest introductory period. However, you should make sure the amount you borrow is within your credit limit and that you pay off the debt before the introductory period ends.

Another option is a personal loan, which may be available even for borrowers with bruised credit who cannot secure the money with collateral or a co-signer. These loans have fixed interest rates and a monthly repayment schedule, which makes them easier to budget than other types of financing. Many also report payments to the three major credit bureaus, which can help your credit score over time if you make timely repayments. This may be the best option for you if your car repairs are small or you can afford to repay them in a short period of time.

Personal Loans

If you’re facing a costly car repair, you might want to consider financing it with a personal loan or line of credit. Unlike payday loans and auto title loans, personal loans have fixed interest rates and monthly payments, making them more budget-friendly than revolving debt like credit cards. Similarly, personal loans from online lenders may be easier to qualify for and deposit funds into your account sooner than traditional banks.

Many auto repair shops work with lenders to offer financing to their customers. This can be in the form of a payment plan or a branded credit card. These options may come with a lower minimum APR than other lenders and a longer 0% APR introductory period, which can help you save money if you pay off the balance before the promotional period ends.