Photo of two cars in a front-end collision accident
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Whether it’s a major system replacement or routine maintenance, repairs are an unavoidable part of owning a car. They’re also expensive ($500 to $600 on average, according to AAA). If you don’t have enough savings on hand, a mechanic’s estimate can make your head spin. But if you can’t afford to pay the bill up front, there are a number of car repair financing options that can get you back on the road.

Credit cards

If you’re disciplined and can pay off your balance quickly, plastic can be a good way to finance a car repair. If you need to carry a balance and have good credit, consider getting a card that charges a zero percent annual percentage rate (APR) for the first year or so. That means you could have 12 to 18 months to pay off the repairs without interest or fees.

Pro: If you can secure a card with a zero percent APR introductory offer, you’re basically getting an interest-free loan. And the approval process is fast, so you likely can get a card quickly.

Con: After the promotional zero percent offer is up, be aware that your interest rate could jump to as high as 20 percent or more — even if you have excellent credit.

Unsecured personal loans

With a personal loan, a bank, credit union or specialized online lender cuts you a check to cover the cost of the repair and you pay it back in installments — and with interest — over time. Rather than using your assets as collateral, unsecured loans are extended based on your creditworthiness.

Pro: Since you don’t put up any collateral, your assets aren’t at risk of seizure if you can’t repay the loan. Plus, interest rates on personal loans tend to be relatively low.

Con: On top of interest, many lenders charge processing fees that add to your total costs. If you have poor credit — anything below 580 — you could struggle to secure a competitive rate for an unsecured loan, or even secure a loan at all.

Home equity line of credit (HELOC)  

With a HELOC, you can borrow money against the equity in your home. The lender extends to you a revolving line of credit (similar to a credit card), using the equity in your home as collateral.

Pro: Interest rates on a HELOC tend to be lower than those on an unsecured loan because they’re backed by your home.

Con: A HELOC has an adjustable rate, meaning your interest rate can increase over the term of the loan. HELOCs also require you to put your house up as collateral, which is dangerous if you’re not confident in your ability to pay back what you’ve borrowed.

Mechanic/shop financing

Many repair shops and dealer service departments offer their own car repair financing options. Similar to dealer financing on a car purchase, the shop foots the bill for the repair and you pay it back, with interest, over a given term.

Pro: A shop might offer you better financing terms than a third-party lender.

Con: Not all shops provide their own financing programs.

Which car repair financing option is right for you?

Determining how to finance your car repair depends factors including the cost of the repair, your credit rating, whether you have equity in your home and whether your repair shop offers financing.

The right choice for you is the one that you can pay back comfortably. That means surveying all the options, looking for the payment and terms that are available for your situation and offer you the best, most affordable deal. Then you can get your car back in working order and head out onto the open road.