14 Jul 2016   /   0 comments

Get Back on the Road with Car Repair Loans

Title loan for car repair

There’s nothing as awful as the feeling you get when you head out to go to work and your car won’t start. Particularly if you have only one vehicle for your family, a breakdown or an accident that puts your car out of commission can represent a major hardship. Car repairs are often very expensive, and when

Simply leaving the car inoperable isn’t usually an option – after all, without your car, you may not be able to get to work in order to make the money to fix it, an ironic circle that many of us know too well. But if your budget or savings account can’t cover the repair costs, there are a few types of car repair loans that can help. In addition to considering personal loans from friends and family, many auto title loan companies offer solutions that could be the perfect way to get your car fixed and back on the road.

What Is a Car Repair Loan?

A car repair loan, one of our many loan types, is a special type of loan that some title loan companies offer. These loans are designed specifically to cover the cost of repairs to a vehicle. As such, they typically come with a few restrictions, which make them different from a standard car title loan. Those may be:

  • The ability to borrow only the amount necessary to cover the cost of repairs.
  • The submission of an itemized bill or a repair quote from a certified mechanic. This means that you could not borrow a car repair loan and fix your car yourself, for example.
  • The loan may be paid directly to the repair shop, rather than to you as a standard auto title loan.
  • The lender may have to go to the repair shop, or to where the car is stored if broken down, and assess the value of the car in person.

Most of the other requirements for auto repair loans are the same as a standard auto title loan. This means that a borrower will have to have the vehicle’s clear title in their name, and a valid driver’s license. In some cases, the type of auto insurance the borrower carries, their income history, and the age of the car can also make a difference.

Pros and Cons of Auto Repair Loans

Whether you are trying to decide what to do very quickly because your vehicle just broke down, or you are trying to come up with a backup plan because you don’t want to experience the stress of scrambling for cash if a breakdown or accident happens, it’s always much easier when you can easily compare the pros and cons of a specific option. Auto repair loans from car title lenders do have may pros, and a few cons, that every smart borrower should consider. Pros include:

  • Borrowing from title lenders is very fast. Often, the application and approval process can be completed within a single day, which is great news if you need your vehicle ASAP for work, school, or essential errands. With one fast trip to a trusted title lender, you could have a car repair loan ready to take back to the repair shop, and get your car fixed in no time.
  • Just like a standard auto title loan, these car repair loans don’t require the borrower to have good credit history. In fact, many title lenders don’t even make a credit score inquiry, which is good news, as a single inquiry can be counted against a lower credit score.
  • You get to keep your car during the entire time you have a car repair loan from a title lender. Once your car has been fixed, you can start using it again right away. Simply pay off the car repair loan according to the terms of the loan, and you will keep your vehicle.
  • These types of loans are based on the value of the vehicle and the quote amount from the repair shop. This means that you can actually borrow as much as you need in order to get your vehicle repaired, and not worry about how you’ll come up with the rest of the cost.

Some of the cons of car repair loans may include:

  • Car repair loans from title lenders typically carry higher interest rates than traditional loans. If you aren’t prepared for the number, it may seem like an exorbitant amount; but keep in mind that for most title lenders, there is no penalty for paying off your loan early and avoiding some of the interest.
  • If a borrower is unable to pay their loan amount by the deadline, and the title company does not have a rollover or extension plan that can be utilized, they may find that their vehicle is repossessed. However, most title lenders do not want to repossess a vehicle. They are in the loan businesses, not the used car sales business. This action makes their work more difficult. This means that for the most part, you’ll find that title lenders who offer car repair loans will want to work with you to ensure that you can pay back your loan.

Using a Car Title Loan for Auto Repairs

If a car repair loan is not an option in your area, you may find that some auto title lenders will offer standard car title loan specifically for repairs. These loans will probably require an inspection of the vehicle in person, to assess its value, but some title lenders may simply use Kelley Blue Book or other online services to determine value. Using a standard car title loan instead of a car repair loan will likely only be a little bit different. The key things to keep in mind include:

  • An auto title loan will likely be paid directly to the vehicle owner, rather than to the car repair shop.
  • If the title lender is loaning based on the car’s standard value after repairs, the borrower may be able to borrow more than the repair quote. This can help if there were other costs associated with the accident that damaged the vehicle, such as damages to your own property, or missed work.

Other than these two differences, using a car title loan for auto repairs will probably be very similar to using a car repair loan from a title lender. The requirements, benefits, and possible negative considerations, are the same. These types of loans are often one of the few options available to those who don’t have perfect credit, and who need money fast to cover repairs right away.

It’s important to check your state’s laws regarding title loans. Some states, such as California, limit the amount of fees that a title lender can charge on a loan. Other states limit the interest rate, or require that title loans be a minimum amount to be classified separately from small loans. Knowing the basic laws of your state can help you choose the best title lender, who will either offer you a great auto title loan for your vehicle, or a car repair loan to cover the cost of getting your car in working order again.

Car Repair Loan or Auto Title Loan?

If you have both a car repair loan and an auto title loan option, and the title lender you have chosen is willing to extend either to help you cover the cost of vehicle repairs, then which you should choose depends largely on your circumstances. You should probably choose a car repair loan if:

  • You only need to cover the cost of the repairs to your vehicle, or the deductible on repairs before your auto insurance kicks in.
  • You don’t want to have a larger debt to pay back after your car is fixed.
  • The title lender is only willing to loan what the car is valued at as it stands (damaged), rather than basing the loan on the car’s undamaged or repaired state.

The biggest reason why a borrower should choose a car repair loan is to keep their loan as small as possible. When you borrow less money, you’ll have less to pay back overall. Interest rates may be the same, but when calculated on a smaller amount, the interest will be less.

However, if you need to cover the cost of other damages done when your car was damaged, a standard auto title loan may be a better choice for your repairs. And if the lender is willing to loan based on the car’s repaired value, you may find that the higher amount can help you cover bills from missed work until you can get your car back in working order. Whichever you choose, be sure that you work with a reputable title lender for your auto title or car repair loan.

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