Best Auto Repair Loans

A Quick Guide to Auto Repair Loans

Auto repair loans are typically unsecured personal loans, meaning that they do not require collateral. 

These loans have fixed APRs, but the range is wider than with some other lending options, and the rate you get varies depending on a number of factors, including your credit score and debt-to-income ratio.

As is the case with unsecured personal loans, you can borrow as little as $1,000 or as much as $100,000 with some lenders, and the payments are done in fixed monthly installments, usually ranging from 12 months to 5 years.

Average Cost of Common Car Repairs

Repair costs vary widely based on your car’s make, model, and the severity of the damage. Below are a few ballpark figures:

• Brake Pad Replacement: $200 – $400 per axle
• Alternator/Starter: $500 – $900
• Fuel Pump or Fuel Injector: $600 – $1,200
• Transmission Rebuild/Replacement: $1,500 – $3,500+
• Diagnostic Check (Check Engine Light): $100 – $200 (plus any actual repair costs)

When the cost of repairs dwarfs your budget, a personal loan can make the bill more manageable. 

However, you’ll want to choose your lender and the amount you want to borrow carefully here, as interest rates and fees can overwhelm you financially if you borrow beyond your means.

Qualification Requirements

Each lender on the market sets its own requirements, but most companies have a few general requirements that you should be aware of.

• Fair to Good Credit: Some lenders specialize in bad-credit borrowers, but rates will be higher. A score of at least 580 is often needed for most loans.
• Reliable Income: Proof of steady employment or verifiable income (like retirement benefits or self-employment income).
• Acceptable Debt-to-Income (DTI) Ratio: Lenders typically look for DTIs under 40%–50%.
• U.S. Residency and Bank Account: A valid ID, Social Security number, and an active checking account to receive funds.

Applying for an Auto Repair Loan

The application process can also vary depending on the lender, but we advise that you make sure to follow the steps we outlined below to make sure you get the best deal possible.

1. Determine The Repair Cost: Get a precise cost estimate from a mechanic. Decide how much you need and whether you can afford the monthly payments.
2. Check Your Credit: Obtain a free credit report from one of the credit bureaus or through one of the many credit monitoring services available on the market today. It is best to be sure that there aren’t any errors in your report before applying for a loan.
3. Pre-Qualify: Compare offers from multiple lenders, as all soft credit pulls done in the same time frame count as just one, and won’t affect your credit score.
4. Compare APRs & Fees: Look at the annual percentage rate, loan term length, and any origination or late fees.
5. Submit a Formal Application: Once you pick a lender, you’ll fill out a more detailed application, often but not always involving a hard credit check.
6. Review and Sign: If approved, carefully read your loan agreement. Check your APR, monthly payments, repayment schedule, and total cost.
7. Receive Funds: Depending on the lender, you could see the money in your account as soon as 24 hours.