Without a car, we only feel like half a person. The beloved mobile pedestal not only makes our way to work easier, but also brings a lot of joy in our free time and creates freedom that would hardly be imaginable without a vehicle. Therefore, it is particularly annoying when something is broken on the car that has to be repaired at great expense.
While small repairs are within a reasonable financial framework, larger damages can be really expensive. For example, when it comes to the transmission or the technology in the vehicle. If the engine is defective, you can already speak of a total loss.
The fact is that many vehicle owners find it difficult to pay for particularly large and therefore expensive repairs. You haven’t saved up enough money, which means that a car repair loan has to be taken out. This is fairly easy to do, but should still be well thought out.
A classic installment loan helps
It is certainly possible to ask the auto repair shop for an installment payment. The large workshops have an offer in this regard and enable their customers to have the car repaired even when the money for the repair is actually not available.
However, this goodwill is disadvantageous if you are looking for flexibility in repayment. Because there are no such offers. The workshop determines when and how much money has to be paid back. The rates are usually high because the repayment should be made within a few months. If you only have a small budget available, you can quickly be overwhelmed.
It is easier to use a simple installment loan from the bank as a loan for a car repair. Not only can the loan amount and the amount of the installments be chosen freely. Special payments and early repayment of the loan are also not a problem.
On top of that there is the possibility to choose the loan for a car repair from many different offers. In this way, you can actively influence the annual percentage rate, which always decides how expensive a loan will ultimately be. The selection is made with the help of a comparison calculator, which can be found here on the Internet.
What needs to be considered?
As with all other loans, the loan for a car repair should only be taken out if there are good conditions for a smooth repayment. There is no point in taking out an expensive loan and then falling into the debt trap if the loan is not repaid. Even if the vehicle is absolutely necessary, the loan for a car repair must always be adjusted to the requirements of the borrower.
The banks always require a good credit rating, which you can get very close to with a good income and a positive Credit Bureau. However, if there is a problem with creditworthiness, it is necessary to see what other collateral can be brought into the loan. A second co-applicant is always very welcome by the banking houses. He can upgrade the creditworthiness, lower the default risk and thus generate a cheap loan with a low effective interest rate. In addition, with a large loan amount, residual debt insurance could be considered. Even if it is relatively expensive, it gives the bank the security that in the event of unemployment, a protracted illness or the sudden death of the borrower, there will be no default in the repayment. In such a case, the insurance would pay the remaining amount.