Is it worth taking out a loan for major car repairs?

Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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, updated on November 25th, 2021       

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Your car may be able to survive a few knocks, but once it packs up it can almost be heartbreaking. Not only do you need to find ways to get around without your wheels, but it can cost you thousands of dollars to bring it back to life. There are finance options such as taking out a personal loan that can help you repair your car, but here are a few handy tips to see if it is the best option for you.

Finding a loan that can fix what is broken

No cost will ever be the same when it comes to how much it will cost to fix a car due to the fact that your repairs costs will be based on the model of car that you own and what is broken. Therefore, it helps to compare your options. Comparing quotes from various mechanics can help you find something that is affordable for your you. It can also help you know whether you can save up for the repairs or you will need to take out a personal loan to cover the repairs.

Finance options that could be available to you

Knowing what finance options are available can make it easier when it comes to comparing something that is financially suitable for you. The most common option is taking out a personal loan which offers a wide variety of lenders to choose from who offer competitively low rates to match your budget. Personal loans also work offer a minimum of $2,000 to $50,000 to help car owners cover small to major repairs. You can also make use of short-term loans and credit cards, but these usually tend to come with high interest rates and less flexibility when it comes to repayments.

How to compare your options

Putting in the research and comparing your options can let you walk away with the best deal that is tailor-made for you. The prominent feature that most potential loan borrowers will hear is to compare the interest rate, and the reason for this is because it shows you if you will be able to afford the loan and if you will be able to meet your loan repayments.

It also pays to use a loan calculator to calculate the comparison rate that shows the true cost of the loan that involves fees and charges too. However, it will be your responsibility to check the ongoing fees that come with the loan before applying to avoid surprises later on. Check to see if the loan comes with flexible features to help you meet repayment and pay off your debt ahead of the set schedule.

Other considerations

Creating a repair and maintenance budget for your car can act as a buffer against future expenses. Keeping to a maintenance schedule can also reduce the number of times your car will be in need of major expenses. You could also consider taking out car insurance to protect you from accident repairs and help reduce out of pocket expenses.

Compare personal loans today

We’re here to help you find the most affordable options, so there’s no better way to compare personal loans and rates than right here, all in one place.