Depending on your car trouble, your auto repair bill could be in the thousands, and you might not have that money lying around. There are some financing options into which you can investigate to see if they’re right for you. Notice how we said investigate, however. East Coast EuroWerks are not financial experts. We’re European automotive experts, but Credit Karma offers good advice about the ins and outs of many personal finance vehicles, some of which get people into trouble quickly.
Traditional Loans Versus Alternative Loans
If you follow finance at all, you might have heard the terms traditional loan and alternate loan. A traditional loan is a loan from a bank, credit union, or other financial institution recognized as traditional and insured by the FDIC. An alternative loan is financing from an individual or alternative lending company that is not a bank, credit, or other FDIC-insured financial institution. These lenders often work with people who do not have the credit to secure a traditional loan from a bank.
A traditional loan would be a personal loan taken out through your bank or another financial institution to pay for your vehicle repairs. You will go through an extensive application process to secure the traditional, including a credit and salary check, and you may have to provide collateral to back up the loan. The advantages of a personal loan are low-interest rates, extended payment options, and, again, working with an institution that is FDIC-insured for your protection.
Alternative loan options for car repairs include payday loans, title loans, and cash advances. The advantages of alternative loans include no credit check; no collateral, except for the title loan; minimal loan application process; and car repairs within 24-to-48 hours. Why do alternative lenders offer such easy financing? Credit Karma cautions because they attach extremely high interest onto the loans, and you must pay them back within weeks.
Title Loan
In addition, a title loan requires you to turn your vehicle’s title over to the lender until the loan is paid back. As you can imagine, if you default on the loan, the lender will retain the title and take possession of your vehicle. It doesn’t sound too good. This is why Credit Karma lists these as your last option. If you have a credit card with a low-interest rate or if you can secure a credit card with one, it’s better to charge your auto repairs than take out an alternative loan.
Also, check to see if your auto mechanic offers discounts on car services. East Coast EuroWerks in Wilmington NC, does so give us a call today.
