Personal Loans

What Should I Know About Repair Shop Payment Plans?

One minute you’re cruising along, then suddenly … uh-oh. A sound, light, rattle or rumble lets you know something has gone wrong with your ride. Be it an accident or just good old wear and tear, the fact is all cars need repairs at some point, and those repairs can be costly.

According to AAA, the average car repair bill falls between $500 to $600, which many drivers cannot pay up front. In fact, a recent AAA study found that 64 million American drivers can’t afford such a bill.

So, is it bus city until you can save up the money to pay for repairs? That may be one option, but fortunately, there are other ways for car owners to finance emergency repairs, including auto shop payment plans, personal loans and low-interest credit cards. Here’s what you need to know to map out the best course to get your car back on the road.

Making your car repairs more affordable

When it comes to auto repairs, the prices aren’t always set in stone. There are ways to barter, bargain and potentially get a better deal than the price with which you’re first presented.

Shop around: While it may seem best to go to the dealership where you purchased your vehicle, that may not always be the most cost-effective choice for repairs. In many cases, an independent auto repair shop may be able to do the same work for less.

Get recommendations: Talk to family and friends and check online reviews to help you find a reliable mechanic that won’t take you for an unnecessarily expensive ride. You should also check to see if repair shops are certified by Automotive Service Excellence (ASE) and the Better Business Bureau (BBB). The ASE offers this search engine for finding a certified car shop.

Bargain: While repair shops may not have a formal price-matching policy, if you have estimates from a couple other shops, they may be more willing to negotiate to get your business. Also, make sure to ask about any discounts or promotions they may offer.

DIY: You don’t have to be a mechanic to do some basic car repairs yourself. The internet is a great source for how-to guides and videos. For example, AutoZone has a video library that demonstrates how to do everything from flushing and filling your cooling system to replacing disc brakes.

What are repair shop payment plans?

Many auto shops offer payment plans, which allow you to get your car repaired right first, and then pay the bill over time. These can be an attractive option to people who don’t have other means to pay and rely on their vehicle to get to work, school and other important activities.

Before you race to sign up for one, however, it’s important to put the brakes on and understand exactly what you’re signing up for.

How do repair shop payment plans work?

Most auto repair shops that offer payment plans do so through partnerships with lending institutions. The plans are typically offered as credit cards that can be used for expenses related to your vehicle.

They often come with low- or no-interest introductory rates and offer an immediate way to pay for vehicle repairs. Not only that, many also offer other promotions and discounts to boot. For example, Goodyear offers a credit card that offers $5 off any oil change and free tire rotations as well as other savings only available to card holders.

How do you qualify for a payment plan? Auto repair payment plans typically offer easy approval, even if your credit isn’t top-notch. You apply in-store and are typically approved or denied within minutes.

What happens if you can’t pay? While that low- or no-interest introductory rate is great, the interest rates for auto repair shop payment plans typically shoot up significantly after that introductory period. For example, Midas offers a credit card with no interest for the first six months, but after that, the interest rate jumps up to 29.99%. Not only that, but you also must pay interest from the original date of the loan on purchases of $199 or more.

That kind of interest can accumulate into some major debt over time, so unless you have a plan to pay off the loan quickly, proceed with caution. And, as with all financial agreements, make sure you understand the full terms before committing.

3 other ways to pay for a car repair

Beyond auto repair shop payment plans, there are other options that may help you pay for an auto repair, including the following:

Personal loan

Personal loans don’t require any kind of collateral, rather a lender will evaluate your credit score and financial history to determine if they’ll grant you a loan and the interest rate they’ll offer if they do. They typically come with fixed interest rates, and you’re required to start paying the loan back in monthly installments immediately.

If you have good credit and can get a loan at a reasonable rate, this may be a good choice for you. However, if your credit isn’t up to par or you have no credit history, it may be difficult to get a personal loan or you may only qualify for triple-digit rates.

Low-rate credit card

Interest rates are at historically low levels, which means you may be able to secure a credit card with a low annual interest rate. They may not come with some of the auto-specific perks that auto repair payment plans do, but they typically offer other perks, and their annual interest rates may be significantly lower.

A low-interest credit card may be a good option if your credit is strong enough that you can secure one and if you have a plan to pay the balance off in a reasonable amount of time.

But if your credit isn’t strong, you may not qualify for a low-interest credit card. Also, if you don’t have a plan to pay off the balance quickly, even a low-interest rate can add up over time.

Payday alternative loans

The word “alternative” is important here. Standard payday loans are offered by online and storefront lenders and come with sky-high fees and interest rates. Consumers are urged to use extreme caution when considering them and avoid them altogether if possible. Payday alternative loans are also short-term loans that give you access to quick cash, but they’re generally offered by credit unions and come with lower interest rates and better terms than regular payday loans.

If you need money to pay for repairs and don’t have stellar credit or qualify for a low-interest loan or credit card, a payday alternative loan may be an option to consider.

But while the interest rates for payday alternative loans are typically lower than those on traditional payday loans, they still can be steep (typically between 18% to 21%). If you don’t have a plan in place to pay the loan off quickly, you can rack up some significant interest charges.

Avoiding debt for car repairs in the future

Car repairs are virtually inevitable, but going into debt to pay for them doesn’t have to be. Here are some ways to help you avoid doing so.

  • Know what it takes: While owning a car comes with plenty of perks, it can also be expensive, and car owners need to know that and plan accordingly. A AAA study found that in 2018 the average cost of operating a vehicle was $8,849 per year.
  • Maintenance matters: Keeping up with regular maintenance is one of the best things you can do to avoid car repair debt, though many people don’t. In fact, another AAA study found that more than one-third of car owners put off or skip regular maintenance on their vehicles. While many may do so to save money, it’s actually likely to cost them more down the road in unexpected repair needs.
  • Consider extended coverage: You may also want to consider mechanical repair coverage or an extended car warranty. While one may not pay 100% of repair bills, it can help soften the blow when repairs are needed.
  • Establish an emergency savings fund: Of course, the importance of having a general emergency fund can’t be overstated either. Unexpected car repairs are one of the primary reasons consumers are encouraged to establish one.

Cars can be expensive, but yours doesn’t have to drive you into debt. Plan ahead, save when possible and take precautions before jumping into any financial agreement to pay for repairs.


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