The car is one of the consumer goods that can hardly be avoided in everyday life. Especially in rural areas or on the outskirts, people are dependent on a reliable vehicle, which is prompting more and more motorists to use the loan for car repairs.
The way to work, general errands or trips to school or kindergarten have to be done by car. If a major repair is necessary, this completely messes up everyday life and the household budget.
Car repair credit can be a good alternative in such cases.
First, the defective vehicle to the workshop and the amount of the repair must be determined. In the case of older vehicles, the residual value should be considered, because it may be cheaper to finance a new used car than to have an expensive repair carried out. In any case, it is advisable to get a second opinion or a second offer about the repair, as there are considerable price differences in the workshops.
If a loan is to be used for car repairs, the driver has several options. The simplest and usually cheapest solution is to pay the amount in installments directly to the workshop. If you are a long-standing customer and can pay off the invoice within a short period of time (up to 12 months), companies often forego interest, so that there are no additional costs. This is a pure service of the workshop, which serves to permanently bind the customer to the company.
If the loan for the car repair has to be financed by a credit institution, there are a few points to consider. A prerequisite is first a regular income and the best possible Credit Bureau information. If this can be proven, it is possible to apply for a special small loan. As a rule, this form of loan is cheaper in interest, but can only be used to pay the repair bill. If you get the loan from the house bank or another bank, you are a cash payer in the workshop and should definitely try to negotiate a cash discount.
In the case of new vehicles that have been financed, the car banks offer their customers an additional repair loan that can be paid out without complications in an emergency. Although this increases the monthly installments, the bureaucratic route is considerably shortened. Proof of income is no longer necessary and quick processing is guaranteed.
The credit for auto repair – notes
The cheapest loan also depends on the amount of the invoice. If it is a few hundred USD, you should check if the workshop does not offer payment in installments whether a short-term increase in overdraft is sufficient. However, this should be reduced as quickly as possible, since the interest rates are very high.
With several thousand USD, several loan offers should be obtained. A comparison of the conditions, such as interest rate, term, processing fees and rate, can save a lot of money. Since a car repair loan is usually a small loan, it is advisable to choose a maximum term of 48 months. Longer terms result in higher costs because the financial institutions allow themselves to pay the increased risk (for example, possible payment defaults) through higher interest rates.