The 6 Best Personal Loans for Auto Repairs

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Updated on Wednesday, November 28, 2018

car repair loans

Car trouble is always a hassle, but it becomes even more nerve-wracking when you don’t have the cash to pay for repairs. If the vehicle you rely on to get to work has just broken down or been involved in an accident, you might need a car repair loan.

Here’s what to consider if your car needs some work:

Does your insurance cover repairs?

You won’t know if you need a loan for car repair until you find out if you’re on the hook for repairs. If your vehicle is under warranty, the repairs could be covered, and if you were involved in an accident, the other party might be at fault.

If you’re not sure if your car is under warranty, CarsDirect recommends finding the vehicle identification number, or VIN, and contacting your local dealership. If they are unable to assist, the site recommends searching for your vehicle history report on Carfax.

In the case of a car accident, Esurance notes that auto insurance is fault-based in most states. Therefore, if you weren’t at fault, the other driver’s insurance company will likely help pay for your car repairs, medical expenses and other costs. If you live in a no-fault state, you might still qualify for assistance with car repairs, so check with your insurer.

Researching pricing and auto body shops

You might not even need a car repair loan — or you can at least reduce the size — if you’re able to score your best possible deal on repairs. If you were in an accident, your insurance company will likely recommend an auto body shop. But you ultimately have the final say on where the repairs are made, according to the National Association of Insurance Commissioners.

It’s also wise to shop around and gather quotes from several auto professionals, to be sure you’re getting your best price. When looking for a repair shop, the Federal Trade Commission advises:

  • Asking family members and friends for recommendations
  • Checking to see if the business is licensed (when required by state or local law)
  • Making sure your vehicle warranty will be honored at the shop

If you’re really trying to avoid car repair loans, you might consider taking your vehicle to an auto mechanic school. Of course, this can be a risky move, as technicians are still students. Before turning your car over to the school, check into liability issues, in case the problems aren’t fixed or new ones are created.

Where to find car repair loans

If you need a car repair loan to get back on the road, a personal loan might be the answer. This type of loan requires no collateral, so you won’t have to pledge assets like your home or car to secure financing. Most personal loans have a fixed-interest rate and a term ranging from one to five years, allowing you to choose an option that fits your budget.

LendingTree offers a personal loan tool that may help you find and compare personal loans from lenders. You’ll fill in basic information about yourself and what you’re seeking in a loan. Then, you may be provided with loans to consider from up to five different lenders.


As low as 3.49%

Credit Req.

Minimum 500 FICO®


24 to 60


Origination Fee



on LendingTree’s secure website

LendingTree is our parent company

Advertiser Disclosure

LendingTree is our parent company. LendingTree is unique in that you may be able to compare up to five personal loan offers within minutes. Everything is done online and you may be pre-qualified by lenders without impacting your credit score. LendingTree is not a lender. Terms Apply. NMLS #1136.

As of 17-May-19, LendingTree Personal Loan consumers were seeing match rates as low as 3.49% (3.49% APR) on a $10,000 loan amount for a term of three (3) years. Rates and APRs were based on a self-identified credit score of 700 or higher, zero down payment, origination fees of $0 to $100 (depending on loan amount and term selected). Terms Apply. NMLS #1136

To kickstart your search for car repair loans, consider these personal loans offered by lenders in the MagnifyMoney personal loan marketplace.

Credit Req.
PenFed Credit Union

Starting at 6.49%

6 to 60


Not specified


on PenFed Credit Union’s secure website

10.68% - 35.89%

36 or 60


Not specified


on LendingTree’s secure website

5.99% - 24.99%

24 and 60



Minimum Credit Score


on LendingTree’s secure website

Advertiser Disclosure

All loans are subject to credit review and approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage and history. Currently loans are not offered in: MA, MS, NE, NV, OH, and WV.
Tower Federal Credit Union

8.74% - 11.74%

12 to 72



Minimum Credit Score

Apply Now Secured

on Tower Federal Credit Union’s secure website

6.99% - 16.99%

24 to 60


Not specified


on LendingTree’s secure website

Advertiser Disclosure

To get a Personal Loan (“Loan”) with the Annual Percentage Rate (APR) shown, you must reside in MA, MD, RI, CT, NH, NJ, PA, NY,DE, ME, VT, or DC, meet our highest credit standards, and use automatic payment (ePay) from any Santander Bank N.A. checking account. Fixed loan APRs (with ePay) range from 6.99% to 16.99%, depending on your creditworthiness. The minimum Loan amount is $5,000 and the maximum is $50,000. The APR on the Loan will increase by 0.25 percentage points and the payment will increase, if ePay is not elected or is discontinued. APRs and other terms are accurate as of 10/01/2018 and may change thereafter. A Santander checking account is not required to qualify for a Loan, but use of ePay from a Santander checking account will result in an interest rate discount. Personal Loans cannot be used to finance post-secondary educational expenses. Loan accounts are subject to approval.
Affinity Federal Credit Union

As low as 9.75%




Minimum Credit Score

Apply Now Secured

on Affinity Federal Credit Union’s secure website

Paying for auto repairs: Comparing your financing options

Personal loans

“A personal loan has a fairly reasonable interest rate when you compare them to other non-asset based borrowing like credit cards, so they are actually not a bad deal, as long as you have decent credit and shop around for your best interest rates,” said Lucas Casarez, CFP and founder of Level up Financial Planning, LLC, a virtual fee-only financial planning firm based in Fort Collins, Colo.

Casarez also warned against seeking nontraditional financing, such as working with a pawn shop or a payday lender.

“The interest rates associated with those types of lenders is eye-popping and to be avoided at all cost(s),” Casarez said.

If you decide to take this route, Jayson Owens, CFP and financial advisor at Bright Road Wealth Management, a fee-only independent investment advisor with offices in Anchorage, Alaska, and Tacoma, Wash., emphasized the importance of making sure you can afford the payment.

“Another common problem is when people don’t compare the alternatives, assuming their primary bank will give them the best rate,” Owens said. “This is almost never the case.”

Cash-out refinance or HELOC

If you have equity in your vehicle or home, Casarez suggested a cash-out vehicle refinance or a home equity line of credit— HELOC — as two possible alternatives.

In a cash-out refinance, the total value of your new loan exceeds the amount needed to pay off the asset — in this case, your vehicle. This only makes sense if you can lower the interest rate and monthly payment, in addition to getting the cash back you need.

A HELOC grants you access to a line of credit you can borrow from as needed. Your lender determines the maximum amount of funds available, then you’re able to choose the amount you actually use.

“Both of these options have a significantly lower interest rate than a personal loan because they are tied to assets,” Casarez said.

Credit cards

In some cases, paying for the car repairs with a credit card might be the wisest move.

“For someone with good credit, credit card rates will likely be better than personal loan rates, particularly an introductory rate,” said Owens. “If a person can commit to paying the card off during the introductory period, that’s frequently the best way to go.”

Putting car repairs on a credit card might benefit some people, but it’s not the best choice for everyone.

“If someone has poor credit, a personal loan might have better rates, particularly if they can pledge collateral — a CD at the same bank, for instance, ” Owens said. “The payments are usually fixed to pay off the loan over a certain term, so you don’t have the flexibility of just paying the minimum and extending the term.”

Ultimately, Owens said the choice between putting repairs on a credit card or taking out a personal loan depends on the person’s behavioral history in previous similar situations.

“This is difficult, because in many cases, the better choice from a financial perspective is not the better choice when you bring human behavior into the equation,” Owens said.

Start an emergency fund for the future

Casarez and Owens agreed establishing an emergency fund is the best way to avoid running short on cash to pay for car repairs in the future.

“If they haven’t started, they should set an emergency fund goal, with a specific date and dollar value, then begin setting a little (aside) each month, even while they are paying off this debt,” Owens said. “The biggest mistake people make with regards to an emergency fund is attempting to wait until they are out of debt to start one.”

The long and short of getting a loan for car repairs

Getting car repairs in a timely manner can be a matter of life or death because it’s unsafe to drive a vehicle that isn’t functioning properly. Taking out a loan for a car repair can allow you to get issues fixed without delay. If you choose this route, always look for ways to save money on repairs.

And if you decide to take out a loan for repairs, be sure to compare lenders to get your best deal possible.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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