An inevitable part of owning a vehicle is that eventually it will need repairs. No, not your routine maintenance, but actual repairs in the workshop.
In instances where you’ve either had an accident or a mechanical fault, you’ll be facing the prospect of a potentially hefty repair bill.
However, not everyone has hundreds (or even thousands) of spare change sitting around. With this in mind, is it worth taking out a loan to repair your car?
Troubleshooting
In order to gauge whether financing might be an appropriate course of action, it’s important to understand the exact nature of the problem(s) with the vehicle.
If the problem is relatively small, a trusted mechanic will usually be able to provide an indicative diagnosis and estimate for the repair work. On the other hand, if you’ve run into a bigger problem, a second or third opinion wouldn’t go astray.
Mechanics charge their own rates, and replacement parts will depend on your vehicle. But once you’ve formed an idea as to the overall state of affairs, you’ll have a clearer indication whether the repair costs are manageable, or if a loan might be helpful.
Finance Options
If the repair bill is in the thousands, you might consider a personal loan. This will give you sufficient time to pay back the money at a reasonable rate. Provided you are able to demonstrate your capacity to pay back the loan, it will be set at a modest interest rate.
Of course, the downside is that the financing application and receipt of funds might take longer than other options, including credit cards or short term loans.
But the disadvantage with those formats concerns shorter payback periods and significantly higher interest costs. Credit cards for instance can exceed 20% in interest per annum, while short term loans may charge an establishment fee as much as 20% of the actual loan value.
When comparing options, make sure that you include all other ancillary costs and ongoing fees that could influence the total cost of the loan. You should also take into account your personal situation, as far as repayment flexibility.
Consider also the impact of being without a car and what role it might have shaping your own livelihood. In some instances, being without a car could mean you’re unable to work, which could cost you a whole lot more than you might spend to repair the vehicle – even accounting for loan interest.
The Fincar team is here to help you with all your financing needs. Contact us today to help arrange your next car or equipment loan.