Nothing works – the car has to go to the workshop. If the quote brings tears to your eyes, good advice is often expensive. Exceeding the repair costs your current budget or the Sparkes has already spent on another unforeseen investment, a loan for the car repair in question. Find out what options you have and what to look for before signing a loan agreement.
Disposition credit or financing?
So many car repair can devour a lot of money. And a new purchase is not always an option. Above all, if your vehicle is only a few years old, you will generally not get an adequate replacement for the estimated repair costs. If the repair is urgently needed, for example if you need your car for the commute, but there is no cash, in principle several financing options come into question. Many will think of the credit line first. Almost every holder of a checking account receives some financial leeway from the bank. Often this is a multiple of the net income. The catch: the interest on the overdraft facility is above average. Some banks charge 14 percent and more – an interest rate that is much higher than a traditional installment loan.
If you do not want to pay these interest rates, you might think about putting your savings into car repair. But that is rarely a wise decision. If the savings are fixed, financial losses are threatened if you want to have the money prematurely. In addition, the “Sparkes” brings after interest rate and / or profits – and even those are reduced, if you minimize the sum.
How can I finance the car repair?
If one looks at the possible alternatives, the form of financing remains the classic installment loan or, if the repair sum remains manageable and the loan can be quickly repaid, a small loan. Both models are basically the same: they receive a certain amount at a fixed interest rate and settle it in a previously agreed term. A small loan is eligible if you need less than 2,000 usd and can repay the sum within one to two months. In all other cases – and major vehicle repairs are likely to exceed this sum – installment credit is the vehicle of choice. This can be paid within a year with manageable rates.
Compare credit terms
Unlike when you finance a vehicle, loans for the car repair are usually not earmarked. That affects the interest rate. A comparison of different loan providers and terms is therefore advisable before you opt for a loan agreement. Sometimes interest rates and conditions can differ so much that you save several hundred usd. In addition, the term of the loan should be kept as short as possible. The next repair can be fast in the house, in the worst case, the vehicle is damaged in an accident and then has to be replaced anyway. If there is still a loan for an older repair, the debt trap threatens.