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Having a vehicle in need of repair after an accident or break down can happen to the best of us. But no one plans for their car to need urgent repairs, and, depending on the type of repairs, costs can climb from hundreds to thousands of dollars. 

So, what are your options when you need car repairs but cannot afford them upfront? This is where a car repair loan may come in handy. With a range of competitive options from Australian personal loan lenders for a multitude of financial situations, you may be able to cruise the open road sooner than expected.

What are personal loans for car repair?

It's no secret that car repairs can be expensive, and no one wants to cut corners when it comes to the reliability of their vehicle. Personal loans for car repair, also known as auto repair loans, may be able to help cover these repair costs.

This type of personal loan is designed to help Aussie drivers get back on the road by providing the borrower with a loan sum that they can then pay the mechanic and/or auto body shop. The personal loan is then to be repaid over a set loan term at a chosen interest rate, generally fixed or variable.  

The loan amount you require will depend on the type and severity of replacements and repairs your vehicle needs. This means that an emergency car repair loan may start from anywhere from a few hundred dollars for a small loan, to thousands of dollars for a medium loan, to tens of thousands of dollars for a large loan.

Much like any other type of personal loan, the borrower will need to meet certain eligibility criteria to receive loan approval. This may include meeting income minimums or having a very good to excellent credit score.  

There are a range of Australian lenders who offer personal loan deals for car repair, so it’s best to perform a personal loan comparison and compare loan options for your financial situation.

What repairs might a car repair loan cover?

A car repair loan may be able to assist the borrower in paying for any of the following common vehicle costs, and much more:

  • Engine repairs
  • Body repairs
  • Gearbox or transmission repairs
  • Electrical repairs
  • Suspension
  • Radiator
  • New tyres
  • Fuel system
  • Breaks
  • Car registration

What are the main features of a personal loan for car repair?

Much like a standard personal loan, a car repair loan offers standard features, including: 

  • Interest rate – Arguably one of the biggest costs of a personal loan, an interest rate is the rate of interest the lender charges on top of your loan amount. If you’re hoping to find a cheap car repair loan, keeping interest rates low may be able to help.
  • Repayment type – Choose between a fixed interest rate, in which the rate will not change for the duration of the loan, or a variable interest rate which is subject to market fluctuation – both good and bad.
  • Repayment frequency - Choose your payment plan options and pay weekly, fortnightly or monthly.
  • Fees – There are a range of fees a personal loan lender may charge, including establishment fees, monthly fees, and annual fees.
  • Loan term – The set period you agree to repay a personal loan.  A short-term loan may be 1-3 years, and a long-term loan may be 4-5 years.
  • Secured or unsecured – Borrowers may choose to secure the loan against an asset, such as the vehicle, to increase your likelihood of loan approval or being offered a lower interest rate. If you were to default on the loan the asset would be seized. Comparatively, unsecured loans do not require the borrower to offer up an asset as security, but due to the greater risk posed to the lender, they generally may come with higher rates and fees.

What are the pros and cons of personal loans for car repair?

It’s worth weighing up the benefits and disadvantages of a car repair loan before you consider applying.

One of the main benefits of a car repair personal loan is that it may be a handy way to pay for your vehicle repair service and get back on the road quickly. This can be particularly useful for those who use their vehicle for business purposes or drive long commutes every day and cannot afford to be off the road.

Personal loans also tend to have lower interest rates than credit cards on average, so the cost may be lower than trying to pay for repair services on your card. However, if you’re the type of cardholder who always pays their balance in full each statement period, this may not be applicable.

On the other hand, you will still need to apply and be approved for the personal loan before you can use these funds on car repairs. The loan application process can take a bit of time and organising, including providing the lender with personal identification, bank statements and waiting for a credit check. With online applications offered by most lenders, this process may only take 15 minutes. But it may still take several business days from indication of need of repairs to getting the funds in your bank account.

You will need to meet the eligibility criteria of the lender to be approved for the loan, and if you struggle with bad credit this may unfortunately hurt your chances. If you struggle with a poor credit history, it may be worth boosting your credit score before you apply.

Frequently asked questions

Is a personal loan a variable or fixed-rate loan?

Depending on the personal loan lender, you may be able to choose between a fixed and a variable interest rate. But, there are a few distinct differences between the two, so it’s important to weigh up the pros and cons before deciding on what’s right for you.

A fixed interest rate loan gets you the convenience of knowing exactly how much you need to repay each fortnight or month. On the other hand, you generally won’t be able to make lump sum or advanced payments to close your personal loan early - or at least not without a penalty.

With a variable interest rate personal loan, you may be able to get a longer loan repayment term, with the option of paying off the loan early. You typically won’t need to pay any additional charges for an early full repayment either. The potential disadvantage with an interest rate that can change is that your repayment is not entirely predictable, as it can fluctuate with the market. However, you’ll likely have more options as more lenders offer a variable interest rate personal loan.

What is a personal loan?

A personal loan sits somewhere between a home loan and a credit card loan. Unlike with a credit card, you need to sign a formal contract to access a personal loan. However, the process is easier and faster than taking out a mortgage.

Loan sizes typically range from several hundred dollars to tens of thousands of dollars, while loan terms usually run from one to five years. Personal loans are generally used to consolidate debts, pay emergency bills or fund one-off expenses like holidays.

Can you refinance a $5000 personal loan?

Much like home loans, many personal loans can be refinanced. This is where you replace your current personal loan with another personal loan, often from another lender and at a lower interest rate. Switching personal loans may let you enjoy more affordable repayments, or useful features and benefits.

If you have a $5000 personal loan as well as other debts, you may be able to use a debt consolidations personal loan to combine these debts into one, potentially saving you money and simplifying your repayments.

What is a bad credit personal loan?

A bad credit personal loan is a personal loan designed for somebody with a bad credit history. This type of personal loan has higher interest rates than regular personal loans as well as higher fees.

Should I get a fixed or variable personal loan?

Fixed personal loans keep your interest rate the same for the full loan term, while interest rates on variable personal loans may be raised or lowered during your loan term.

A fixed rate personal loan keeps your repayments consistent, which can help keep your budgeting consistent. You won't have to worry about higher repayments if your rates were to rise. However, on a fixed loan you’ll also potentially miss out on more affordable repayments if variable rates were to fall.

What is the average interest rate on personal loans for single parents?

Like other types of personal loans, the average interest rate for personal loans for single parents changes regularly, as lenders add, remove, and vary their loan offers. The interest rate you’ll receive may depend on a range of different factors, including your loan amount, loan term, security, income, and credit score.

Can I merge my personal loan with my home loan?

Yes, you can refinance your home loan and, in the process, merge or consolidate your personal loan and home loan. By doing so, you can lower the number of debts you have, and you may also reduce the total interest you have to pay.

However, you should consult a financial advisor or a mortgage broker to confirm that you are decreasing your total outstanding debt, including interest payments. The repayment term for a home loan can be much longer than that for a personal loan, and by merging the two, you could be repaying a higher amount over the full term.

Does refinancing a personal loan hurt your credit score?

Personal loan refinancing means taking out a new loan with more desirable terms in order to access a more competitive interest rate, longer loan term, better features, or even to consolidate debts.

In some situations, refinancing a personal loan can improve your credit score, while in others, it may have a negative impact. If you refinance multiple loans by consolidating these into one loan, it could improve your credit score as you’ll have only one outstanding debt liability. Your credit may also improve if you consistently pay the instalments on time.

However, applying to refinance with multiple lenders could negatively affect your credit if your applications are rejected. Also, if you delay or default the repayment, your credit score reduces.

How long does it take to get a student personal loan?

Completing an online personal loan application can often take anywhere from 10 minutes to 1 hour. Depending on your lender, processing your personal loan application may take anywhere between 1 and 24 hours. If your personal loan application is approved, you may receive the money in your bank account the following business day, or, in some cases, the same day.

What do I need to get a fast loan?

Most lenders will need to you provide the following information in your application for a fast loan:

  • Proof of identity
  • Proof of residence
  • Proof of income
  • Details of any assets you own (e.g. car, home etc.)
  • Details of any liabilities you owe (other personal loans, credit cards, mortgages etc.)
  • How much you want to borrow
  • Over how long you want to pay it back
  • Purpose of your loan

Are there alternatives to $2000 loans?

If you need to borrow $2000 or less, alternatives to getting a personal loan or payday loan include using a credit card or the redraw facility of your home, car or personal loan.

Before you borrow $2000 on a credit card, remember that interest will continue being charged on what you owe until you clear your credit card balance. To minimise your interest, consider prioritising paying off your credit card.

Before you draw down $2000 in extra repayments from your home, car or personal loan using a redraw facility, note that fees and charges may apply, and drawing money from your loan may mean your loan will take longer to repay, costing you more in total interest.

Can you get an emergency loan on Centrelink?

When many lenders assess a borrower’s income to determine whether they can afford a loan’s repayments without ending up in financial stress, they may not count Centrelink payments as income for this purpose.

Before applying for an emergency loan, it may be worth contacting a potential lender to find out if they accept applications from borrowers on Centrelink.

Is it hard to improve your credit score?

It can be hard to improve your credit score, as it usually requires sacrifice and discipline, but hard doesn’t necessarily mean complicated. Some simple ways you can give your credit score a boost include closing extra credit cards, reducing your credit card limit, pay off any loans and make loan repayments on time.

As a general rule, the lower your credit score, the more remedies you can apply and the greater the scope for improvement.

Can I get a $2000 loan on Centrelink?

If more than half of your income comes from Centrelink benefits, it may be more difficult to have a $2000 loan application approved. Many lenders will check if you can afford a loan’s repayments on the income from your job before they’ll approve an application, and many won’t count Centrelink payments when assessing your income for this purpose.

Some lenders may offer $2000 loans to borrowers on Centrelink – consider contacting potential lenders to check before applying.

How long are $3000 loans?

Medium amount loans can be repaid between 16 days and 2 years. Many personal loans have terms between 1 year and 5 years, though some are as short as 6 months while others last for 10 years.

Generally, the shorter a loan’s term, the more expensive your regular repayments may be, but the less total interest you’ll pay. Loans with longer terms mean more affordable repayments, but more interest charges over the full term.

Do $4000 loans have no credit checks?

Many medium amount loans for $4000 have no credit checks and are instead assessed based on your current ability to repay the loan, rather than by looking at your credit history. While these loans can appear attractive to bad credit borrowers, it’s important to remember that they often have high fees and can be costlier than other options.

Personal loans for $4000 are more likely to have longer loan terms and will require a credit check as part of the application process. Bad credit borrowers may see their $4000 loan applications declined or have to pay higher interest rates than good credit borrowers.

Can I get a bad credit personal loan with a guarantor?

Some lenders will consider personal loan applications from a borrower with bad credit if the borrower has a family member with good credit willing to guarantee the loan (a guarantor).

If the borrower fails to pay back their personal loan, it will be their guarantor’s responsibility to cover the repayments.

What can I use a bad credit personal loan for?

Generally, bad credit personal loans can be used for the following purposes:

  • Debt consolidation
  • Paying bills
  • Buying vehicles
  • Moving expenses
  • Holidays
  • Weddings
  • Education

Some lenders restrict how their bad credit personal loans can be used as part of their commitment to responsible lending – be sure to check before applying.

What documentation is needed for a self-employed personal loan?

Personal loans may require a borrower to provide proof of identity, proof of residence, details of any other outstanding loans (including credit cards), details of assets they own (e.g. savings, car, property), and proof of income.

While borrowers in full-time or part-time employment can often provide payslips and similar documents to prove their income, self-employed borrowers may need to provide other documents, such as bank statements or tax returns, to demonstrate that their income can cover a loan’s repayments.

Can I get a fast loan if I’m unemployed or on Centrelink?

Even if a lender has no credit checks, they will usually still need to confirm you can afford to repay a fast loan on your income before they’ll approve your application.

If 50% or more of your income comes from Centrelink payments, you may find it more difficult to have a fast loan application approved. Consider checking with the lender before applying to confirm if they lend to people on Centrelink.