How to Pay for Car Repairs When You Don't Have the Money
Where to get money for a repair bill
When you face an unexpected car repair, you have several ways to pay: a personal loan from a bank or credit union, a credit card, a loan from the repair shop itself, or a buy-now-pay-later service. Each has different costs, approval speed, and terms. The cheapest option depends on your credit score and how quickly you need the repair done.
The repair shop is often the first place to ask. Many shops offer in-house financing or work with a third-party lender to let you pay over time. This can be faster than going to a bank, but the interest rate is usually higher. Credit unions typically offer lower rates than banks if you are a member, and personal loans from either source usually cost less than credit cards or shop financing.
If you have good credit, a 0% introductory credit card offer can save you money if you pay off the balance before the promotional period ends. Buy-now-pay-later services like Affirm or Klarna are growing options, though they work best for smaller repairs and come with their own fees if you miss a payment.
Key Takeaways
- Repair shop financing is fastest but usually carries higher interest rates than bank loans or credit union loans.
- Credit unions typically offer lower rates than banks, especially if you have been a member for a while.
- Personal loans from banks or credit unions usually have fixed monthly payments and lower rates than credit cards.
- A 0% introductory credit card works only if you can pay the full balance before the promotional period ends.
- Buy-now-pay-later services charge fees if you miss a payment, so read the terms carefully before committing.
In-house financing from the repair shop
Many repair shops partner with a financing company or lend money directly to customers. The application is quick—often just a few minutes—and you can usually get an answer on the spot. The shop sends the bill to the lender, and you make monthly payments to the lender, not the shop.
The downside is cost. Shop financing typically charges 15% to 29% interest, sometimes higher. The loan term is usually short, between 12 and 36 months. If you have poor credit, the shop may be your only option, but that high interest rate means you will pay significantly more than the original repair bill.
Before you agree, ask the shop what the total cost will be with interest included. Compare that number to what a bank or credit union would charge. Some shops will negotiate the repair price if you pay in cash or with a debit card, which can offset some of the financing cost.
Personal loans from banks and credit unions
A personal loan from a bank or credit union is often cheaper than shop financing. Interest rates range from about 6% to 36%, depending on your credit score and the lender. Credit unions almost always charge less than banks for the same credit profile. The application takes a few days to a week, and you receive the money as a lump sum that you can use immediately.
You will make fixed monthly payments over a set period, usually 24 to 60 months. This predictability makes budgeting easier than a credit card, where the payment amount can change. If you are a credit union member, call and ask about their personal loan rates before you go to a bank.
To may have access to, you will need to provide proof of income, such as recent pay stubs or tax returns. The lender will check your credit report. If your credit score is below 620, you may not may have access to, or you may face a higher rate. Some credit unions have more flexible standards than banks, especially for members with a long history with the institution.
Credit cards and 0% promotional offers
If you have a credit card with available credit, you can charge the repair immediately. If the card offers a 0% introductory period—usually 6 to 21 months—you pay no interest as long as you pay off the balance before the period ends. This is the cheapest option if you can manage it.
The catch is that if you do not pay the full balance by the end of the promotional period, the interest rate jumps to the card's regular rate, often 18% to 25%. You will also owe interest on the entire original balance, not just what remains. Many cards also charge a balance transfer fee if you move the debt to another card.
This option works best if you know you can pay off the repair cost within the promotional window. If you are uncertain, a personal loan with a fixed rate and set term is safer because you know exactly what you will owe and when.
Buy-now-pay-later services
Services like Affirm, Klarna, and Sezzle let you split a purchase into installments, usually four payments spread over six weeks to a few months. Some shops accept these services directly; others do not. You apply through the service's app or website, and approval is often instant.
Many buy-now-pay-later services charge no interest if you make all payments on time. However, they charge late fees—often $10 to $35 per missed payment—and some charge origination fees upfront. The total cost can add up quickly if you miss even one payment. These services work best for smaller repairs under $500 where you are confident you can pay on schedule.
Check whether your repair shop accepts the service before you apply. Not all shops do, and you do not want a hard inquiry on your credit report if you cannot use it.
Asking the repair shop to wait or negotiate
Before you take on debt, ask the shop if you can pay part of the bill now and the rest later, or if they will reduce the price for immediate payment. Some shops will work with you, especially if you are a regular customer. Others may let you pick up the car and pay within 30 days without financing.
You can also ask the shop to break the repair into stages. For example, they might fix the brakes now and schedule the alignment for next month. This spreads the cost over time without formal financing and without interest. If the repair bill seems high, get a second estimate from another shop. Prices vary significantly, and a cheaper shop might mean you do not need to borrow as much or at all.
Comparing costs across options
To find the cheapest option, calculate the total cost you will pay, including all interest and fees. A $1,500 repair at 25% interest over 24 months costs about $1,950 total. The same repair at 8% costs about $1,620. That $330 difference is worth the time to apply for a bank or credit union loan.
The table below shows how each option stacks up on interest rate, approval time, and what each works best for. Use it to narrow down which options make sense for your situation and repair cost.
| Option | Interest Rate Range | Approval Time | Loan Term | Best For |
|---|---|---|---|---|
| Shop financing | 15% to 29% | Minutes to hours | 12 to 36 months | Fast approval when other options are not available |
| Bank personal loan | 6% to 36% | 3 to 7 days | 24 to 60 months | Lower rates with good credit; predictable payments |
| Credit union personal loan | 6% to 36% | 1 to 5 days | 24 to 60 months | Lowest rates for members; flexible underwriting |
| Credit card (regular) | 15% to 25% | Instant | Flexible | Small repairs you can pay off quickly |
| Credit card (0% promo) | 0% for 6 to 21 months | Instant | 6 to 21 months | Larger repairs if you can pay in full before promo ends |
| Buy-now-pay-later | 0% if on time; late fees $10 to $35 | Instant | 6 weeks to 6 months | Smaller repairs under $500 with reliable payment ability |
Frequently Asked Questions
Can I get a personal loan if I have bad credit?
Yes, but you will pay a higher interest rate, usually 25% to 36%. Credit unions are more likely to work with you than banks. Some online lenders specialize in bad-credit loans, though their rates are often the highest. Shop financing is another option, though it also charges high rates. Compare all offers before you decide.
What if I cannot afford the monthly payment?
Contact the lender immediately and ask about a longer loan term, which lowers the monthly payment but increases total interest. Some lenders will work with you if you explain your situation. For shop financing, ask if they can extend the term. Do not ignore the debt—missed payments damage your credit score and may result in collection action.
Should I use my savings or borrow?
If you have an emergency fund, using it for a necessary repair protects you from high-interest debt. However, if that savings is your only cushion for job loss or medical emergencies, borrowing at a low rate might be safer. A credit union loan at 8% is usually cheaper than depleting savings you cannot easily rebuild.
Do repair shops report financing to credit bureaus?
Most shop financing does not appear on your credit report because the lender, not the shop, owns the loan. Bank and credit union loans always report to credit bureaus. This means shop financing does not help your credit score, but it also does not hurt it if you pay on time. Personal loans can improve your credit if you make all payments.
What happens if I pay off the loan early?
Most personal loans from banks and credit unions allow early repayment without penalty. You will pay less interest overall. Credit cards and buy-now-pay-later services also let you pay early. Shop financing sometimes charges a prepayment penalty, so ask before you sign.