How you can Pay for Car Repairs Should you Don't Come with an Emergency Fund – Credit Sesame

It's not brain surgery to understand that having money saved for a rainy day is smart. We love to encourage people to build an emergency savings fund to organize for the unexpected. Because the Atlantic recently featured, the truth for most people is the fact that saving hundreds or thousands of dollars is really a struggle.

Expensive calamities don't wait. Whenever your car breaks down, it isn't helpful to hear that you ought to have anticipated the expense months ago. Fortunately, you have choices to pay for car repairs even though you do not have savings.

Some services are covered

If the car got damaged within an accident, your insurance provider should offer emergency roadside assistance coverage and cover repair expenses once you meet your deductible.

If the vehicle broke down but was not within an accident, you might still have the ability to access free help. First, seek advice from your car insurance provider (call the amount on your proof of insurance.) Members of AAA can get roadside the aid of trustworthy providers. Organizations like the AARP and some motor clubs provide this benefit too. Roadside assistance can even come in the form of a credit card benefit. Also check with the dealership where you bought your car (even if you got it used).

Several major credit card companies and issuers offer emergency road services, check your credit card for which benefits are offered and what limitations and exclusions apply. Some premium accounts offers this perk free of charge, while others charge per service call, also any third party fees are the responsibility of the cardmember.

How to find a good deal on auto repair

Of course, you want your vehicle fixed as soon as possible so that you can resume your normal life. Take the time to find a good deal. Strive for a minimum of three estimates from different reputable repair shops. Tell them you're comparing offers and ask about any discounts they've already available. For repairs covered with insurance, your insurer will measure the damage and compensate you for which they judge to be the value of the repairs. Generally, they're required to allow you to choose your repair center.

Need to create the cost down much more? Call technical or vocational schools in your town. If they train students to work as auto mechanics, you may be capable of working out a deal with an instructor to apply your car in the classroom. Ask whether the instructor will assess your vehicle and allow the class work on it, what they will charge for parts, and just what happens when they can't repair the damage.

Beware of shops that advertise to waive your deductible. Based on where you live and your insurance company's rules, this may or might not be legal. It's a danger signal the shop may not be ethical. Some shops inflate estimated repairs to get insurance providers to overpay, or recoup the money they “save” you by using inadequate parts. Waiving a deductible isn't always a giveaway of the crooked business, but it's reason to become cautious.

Be smart with your credit card

Let's assume borrowing money interest-free from friends or family isn't a choice for you. For those who have credit cards, that might be an authentic option.

Using your credit card to purchase repair services is a great move if your credit card provider offers a warranty against bad repairs. If you have a balance you'll pay interest, however, you might choose that it is a reasonable cost for getting back on the highway. As with any credit debt, make a plan for paying off the total amount.

[Also Read: Charging $10K on the New Car Deposit & Credit Card Insights to Boost Rewards]

Avoid credit card cash advances if at all possible. These have a tendency to come with a high rate of interest with no purchase protection. The credit card company also charges interest on a cash advance in the day of the transaction. On a regular purchase, you have a grace period (usually at least 21 days) before interest fees kick in.

How to prevent predatory lending practices (bad car title loans)

If your credit score is poor, you might find yourself considering a title loan to finance your repairs. This can be a tough situation because many companies offering car title loans engage in predatory practices. “Predatory” means a higher cost financial product is marketed to individuals who don't put on many options or much of financial resources.

[Related: Just Say No to Title Loans]

In many states, car title loans are unregulated and also the interest charges are through the roof. Nationally, the typical title loan APR is 300 to 500 percent, as well as in a multitude of locations the rate is over 1,000 percent. If a title loan is the only realistic way for you to develop the cash you need for car repairs, follow these guidelines to protect yourself:

>>Short repayment term (although not way too short). Nine to twelve months is the best for most people. That gives you time to remove the debt without rolling right into a new loan, although not so much time the debt outlives the vehicle.

>>Affordable payment per month. Payment should affect both principal and interest.

>>An accountable lender will underwrite the loan; that's, they'll examine your income along with other obligations to make sure you will be able to result in the payments

>>Use of your money should be optional. The lending company may pressure you into authorizing automatic deductions from your bank account. If you don't wish to allow it, they may charge an extra fee! Don't let the lending company pressure you into agreeing to something don't want to do.

>>Reasonable APR. Advertised minute rates are usually monthly, not annually. If at all possible, the APR should not be a more than 36-40 percent.

Payday lenders really are a bad idea for almost anyone. Time and time again, research indicates the price is higher than the borrower thinks it will likely be. The typical payday loan borrower renews his loan eight times before successfully paying it off. That means loan fees and massive interest charges that can add up to many times the amount of the original loan.

A payment or barter agreement

Another alternative for financing auto repairs would be to talk to the car shop about creating payments. They may offer comparable or better terms than you find elsewhere. Should you choose enter a contract, stick to the same guidelines we mentioned previously.

One last idea is to offer to barter. Do you have a skill or profession that might be valuable to the repair shop? Yard work, building maintenance, babysitting — you never know exactly what the shop owner may need. You could trade labor hours and reduce your bill to just the price of parts.

Whatever agreement you come up with, be sure to get it in writing to protect everyone involved.