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Best Auto Repair Loans for March 2024
| Company | APR | Credit Score est. | Loan Amount | More Details | |
|---|---|---|---|---|---|
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Best Overall, Best for Fast Funding : Patelco Credit Union
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- APR Range: 8.95% - 17.90%
- Loan Amount: $300 - $100,000
- Loan Terms: 6 months - 84 months
You will need to join the credit union and open an account to get a personal loan, but anyone can become a member.
- Broad range of loan amounts
- Flexible repayment terms
- Low maximum interest rate
- No upfront fees
- Must become a credit union member
- No same-day funding
- Relatively high minimum interest rate
- Recommended minimum credit score of 640
- Available in all states and Washington D.C.
- Become a member and open an account to get approved (if you don't qualify based on its eligibility criteria, you can join by becoming a member of the Financial Fitness Association, for which Patelco will pay the first year's membership fee)
Patelco was established in 1936 by employees of Pacific Telephone and Telegraph Company, now part of AT&T. It is headquartered in Dublin, California.
Best for Fast Funding : First Tech Federal Credit Union
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- APR Range: 8.94% - 18.00%
- Loan Amount: $500 - $50,000
- Loan Terms: 24 months - 84 months
If you only need money for a small repair, you can borrow as little as $500 with First Tech—and you can have it as soon as the same day. The lender's maximum interest rate is low, like other credit unions, and you won't have to worry about an origination fee eating into your loan disbursement.
While the lender doesn't disclose specific income requirements, its minimum recommended credit score is 660 (according to a customer representative). You can get a rate quote with just a soft credit inquiry. And if you can't get approved on your own, you can add a co-signer to your application. The credit union also offers loans you can secure with a savings account or stocks.
- Low minimum loan amount
- Low maximum interest rate
- No upfront fees
- Allows co-signers
- Must become a credit union member
- No rate discounts
- Minimum recommended credit score of 660
- Recommended minimum credit score of 660
- Available in all U.S. states and Washington, D.C.
- Must open a savings account to join the credit union
First Tech is headquartered in Beaverton, Oregon, and dates back to 1952 when it was formed by employees of Hewlett-Packard and Tektronix.
Best for Expensive Repairs : SoFi
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- APR Range: 8.99% - 29.49%
- Loan Amount: $5,000 - $100,000
- Loan Terms: 24 months - 84 months
However, the minimum loan amount is $5,000, which makes the lender worth considering only for major auto repairs. The minimum interest rate is competitive with other top personal loans, while the maximum rate is relatively low. SoFi also offers a 0.25% discount on your interest rate if you set up automatic payments.
Loan funds can be disbursed as soon as the day you’re approved, but it can take up to a few days for some borrowers. The lender allows joint applicants, so you may be able to get approved with someone else if you can't qualify on your own. Applications with a co-borrower may take one to two weeks longer.
SoFi doesn't disclose specific minimum credit or income requirements, but like many lenders, it does allow you to get pre-qualified with no impact on your credit score. You may need a pretty good score to be approved—the weighted average score of SoFi borrowers was 747 in 2022, according to the lender’s annual report.
- No fees whatsoever
- Rate discount with automatic payments
- Allows joint loans
- High minimum loan amount
- Relatively high credit requirements
- Loans are available in all 50 states and Washington, D.C.
- Must be a U.S. citizen, permanent resident, or non-permanent resident
- Must be the age of majority in your state
- Must be employed, have sufficient income from other sources, or have an offer of employment to start within the next 90 days
In addition to lending, SoFi offers online banking services and investment options. Headquartered in San Francisco, SoFi also has offices in Healdsburg, California, and New York City.
Best for Small Loans : Lake Michigan Credit Union
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- APR Range: 9.99% - 18.00%
- Loan Amount: $250 - $25,000
- Loan Terms: 24 months - 60 months
One big negative is that LMCU doesn’t offer pre-qualification, which means you can’t see your rate and term without completing a formal application (and dinging your credit score slightly). Also, because it’s a credit union, you’ll need to become a member before borrowing. Membership is easy to obtain.
- Small loan amounts
- Low minimum credit score of 620 required
- No pre-qualification
- Requires membership
- You must have a minimum credit score of 620 to qualify for a personal loan with LMCU.
- To become a member, you must live, work, or go to church in Florida or Michigan’s lower peninsula, be a U.S. citizen with an immediate family member who is an LMCU member, or be a US citizen and contribute $5 to the Amyotrophic Lateral Sclerosis Fund.
Lake Michigan Credit Union (LMCU) was founded in 1933. In 2022, LMCU acquired Pilot Bank, based in Florida. Today, it has more than $12 billion in assets and is the largest financial institution headquartered in West Michigan.
Best for Low Interest Rates, Best for Low Minimum Credit Requirement : Upstart
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- APR Range: 7.80% - 35.99%
- Loan Amount: $1,000 - $50,000
- Loan Terms: 36 months - 60 months
Be aware that Upstart charges origination fees up to 9.99% of the amount borrowed, so you’ll need to factor that into the amount you borrow. Pre-qualification will help you comparison shop.
- Low minimum interest rate
- Available to borrowers with poor or limited credit
- Next-day funding is available
- May charge an origination fee
- No rate discounts
- Doesn't allow co-signers
- Recommended minimum credit score of 300
- Must have a valid email address and bank account
- Must earn an annual income of at least $12,000
- Must be employed or have a job offer starting within six months
- Must be at least 18 years old and have a U.S. address
- Available in all U.S. states and Washington, D.C.
Upstart (UPST) is a publicly held company that uses artificial intelligence to connect borrowers with potential lenders including hundreds of banks and credit unions. It is headquartered in San Mateo, California.
Best for Bad Credit : Upgrade
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- APR Range: 8.49% - 35.99%
- Loan Amount: $1,000 - $50,000
- Loan Terms: 24 months - 84 months
Upgrade may allow you to use your car to secure your loan, which could help you qualify for a lower interest rate. Other ways to get a lower rate include setting up automatic payments—Upgrade doesn't specify how much of a discount you'll get—and having an Upgrade Rewards Checking Plus account, which could reduce your rate by up to 20%.
One area where Upgrade falls short is in its origination fee, which ranges from 1.85% to 9.99% of the loan amount. Upgrade is far from the only lender that charges an origination fee, but its maximum fee is high compared to other options. Still, these kinds of fees are typical for loans for bad credit.
Upgrade offers fairly low minimum loan amounts, so depending on how big your repair bill is, you may not have to borrow more than you need. Funding generally occurs within one business day of approval.
- Accessible to borrowers with bad credit
- Allows joint loans
- Rate discounts for autopay and select customers
- Charges an origination fee
- High maximum APR
- Available in all U.S. states
- Maximum debt-to-income (DTI) ratio of 75%
- Recommended minimum credit score of 620
- Must have a valid U.S. bank account and email address
- Must be at least 18 years old and a U.S. citizen, permanent resident, or non-permanent resident
Upgrade, headquartered in San Francisco, is a financial technology company that works with partner banks to issue personal loans. Upgrade was founded in 2017.
Compare the Best Auto Repair Loans for March 2024
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The Bottom Line
Regardless of your credit history, there are several auto repair loans available to help you finance your costs. While our list of the best personal loans for auto repair can be a great place to start, take some time to shop around and compare several offers to ensure you get the best deal. With that said, if you need a small loan, Lake Michigan Credit Union, Patelco Credit Union, and First Tech Credit Union are solid choices. And if you want to avoid an origination fee, consider SoFi, Patelco, or First Tech. If you have excellent credit and want to maximize your interest savings, Upstart is a good place to start; it’s also a good lender if your credit needs some work, as is Upgrade.Guide to Choosing the Best Auto Repair Loan
Should You Apply For an Auto Repair Loan?
An auto repair loan may make sense if you have good credit, no cheaper alternatives, and have an inoperable vehicle you need for transportation to work or school.Warning
If you have poor credit, an auto repair loan can be expensive. Make sure you understand and can bear the costs before you proceed.
Where to Get an Auto Repair Loan
There are several different lenders that offer personal loans, including:- Online lenders: Some offer low interest rates and fees, while others provide more accessibility for borrowers with less-than-stellar credit.
- Traditional banks: These may not offer competitive rates or fees, but they can make it easy to apply if you're an existing customer.
- Credit unions: These institutions typically offer low maximum rates and few fees, but they require you to be a member to get approved.
- Loan marketplaces: These allow you to get pre-qualified with multiple lenders at once, making it easier to shop around and find the best deal.
Most Borrowers Do Their Research Online
In Investopedia's 2023 Personal Loan Borrower Survey, when we asked borrowers to select the top factors that determined where they applied for a loan, the lender’s website was cited in 48% of responses.
Average Auto Repair Costs
The table below shows cost estimates for some common auto repairs, based on data collected by Kelley Blue Book.
| Repair | Cost |
|---|---|
| Alignment | $192.73 |
| WordStr Alternator | $842.18 |
| WordStr Brake Pad or Rotor | $612.01 |
| WordStr Fuel Pump | $1,211.87 |
| WordStr Spark Plug | $417.07 |
| WordStr Starter | $820.04 |
Keep an Eye on the Fed's Target Federal Funds Rate
The Fed held rates steady at its most recent meeting March 19-20—the fifth consecutive meeting at which it has done so. From March 2022 through July 2023, the Fed increased its target rate range 11 times, from near zero to 5.25–5.50%. Before that rate-hiking campaign, the average APR for a 24-month personal loan from commercial banks was 9.38%. That number has risen along with the Fed's rate hikes to 12.35%.
Fed members indicated that they expect to cut rates later this year, but until that happens, lending rates are unlikely to get any lower. Because personal loans typically are fixed-rate products, the rate you get when take out your loan is the rate you'll have for the duration of that loan. Lending rates typically will rise or fall along with what the Fed does, so if you expect to have a longer repayment term, it might be a good idea to wait until later this year or next year to get a personal loan. The Fed is scheduled to meet again April 30–May 1.
Comparing Auto Repair Loans
As you shop around and compare options, here are some factors to keep in mind to ensure you get the best deal and experience:- Eligibility requirements: Start by checking whether the lender offers loans in your state and if it's transparent about minimum credit and income requirements. If you think you may have trouble getting approved on your own, consider lenders that allow co-signers.
- Pre-qualification: Check whether the lender offers pre-qualification with a soft credit check. Most lenders won’t tell you the exact required credit score or minimum income, so pre-qualification is important.
- Rates and fees: Get pre-qualified with multiple lenders so you can compare their annual percentage rates (APRs). Watch out for origination fees, which are usually deducted from the disbursement amount and can leave you short on your cash needs.
- Repayment terms: Depending on where you look, repayment terms typically range from one to seven years. Check to see how flexible a lender is with its options and whether you can afford the monthly payments.
- Loan amounts: Review each lender's terms to make sure your desired loan amount is within its range of offerings.
- Loan use restrictions: Most personal loans can be used for a variety of purposes, but some may set some limitations. Check for potential restrictions that could impact your ability to use the funds.
Shorter Repayment Terms Can Save You Money
Based on data from 18 lenders, the average personal loan interest rate is 23.88% for terms of about 48 months. However, the Fed reports that 24-month personal loans have an average rate of 12.35%.
If you can afford the higher monthly payments that come with a shorter term, it could save you a lot of money. The chart below shows the potential savings of a 24-month term as opposed to a 48-month term on a $2,000 auto repair loan:| $2,000 Auto Repair Loan | |||
|---|---|---|---|
| Loan Term | APR* | Monthly Payment | Total Interest Paid |
| 24 months | 12.35% | $94.47 | $267.38 |
| 48 months | 23.88% | $65.07 | $1,123.41 |
How to Qualify For and Apply For an Auto Repair Loan
Lenders consider several factors when you apply for a personal loan. Here are some to keep in mind as you research your options:- Credit history: While personal loans are available to borrowers across the credit spectrum, individual lenders will set a minimum score requirement. Additionally, lenders will review your credit reports, looking for negative items that could indicate risk (such as missed payments, bankruptcies, and more).
- Income: Lenders may have a minimum income requirement, but that's not always the case. With or without a minimum income, they'll typically calculate your debt-to-income ratio—the percentage of your gross monthly income that goes toward debt payments—to determine whether you can afford to repay the debt.
- Co-signing: If your credit or income isn't enough to get approved, or you can only qualify for high interest rates, some lenders may allow you to apply with a co-signer. Because the co-signer is agreeing to pay off the loan if you can't, the lender will consider their credit history and income along with yours to make a decision.
Alternatives to an Auto Repair Loan
Depending on your situation, you may be able to take advantage of other opportunities to cover your auto repair costs. Keep in mind, though, that some may be more expensive than others:- Credit cards: If you have good credit, you may be able to qualify for a credit card with an introductory 0% APR promotion, which can save you hundreds in interest. Even if your credit is in poor shape, you may be able to use an existing credit card to cover your repair costs. Just make sure you pay off the balance quickly to avoid high interest charges.
- Car repair insurance: Car repair insurance, sold as a separate policy from normal auto insurance, can help cover costs and is often inexpensive, but it only covers certain types of repairs and may be redundant with coverage you already have.
- Borrowing from family or friends: If you have the right kind of relationship with a loved one, you may be able to borrow money and repay it without interest or fees. Just make sure you draw up an official contract for the loan and pay it on time or early to avoid potentially damaging your relationship.
- Payday loans: Payday loans are often easy to obtain, even if your credit is in dire shape, and loan amounts can range anywhere from $50 to $1,000, depending on where you live. But payday loans aren’t recommended, as APRs average 400% or more, and you'll typically need to repay the debt within 14 days.
- Auto title loans: If you have significant equity in your car or own it outright, you may be able to get an auto title loan. But like payday loans, auto title loans aren’t recommended because they can be incredibly expensive, with APRs upwards of 300%.
Why You Should Trust Us
Investopedia collected and analyzed hundreds of key data points from over 70 companies across three months to identify the most important factors for readers choosing an auto repair loan. We used this data to review each company for rates, fees, repayment terms, credit requirements, and other features to provide unbiased, comprehensive reviews to ensure our readers make the right decision for their needs. Investopedia launched in 1999, and has been helping readers find the best auto repair loans since 2023.Frequently Asked Questions
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Are Auto Repair Loans Hard to Get?
There's no universal minimum credit score requirement to get approved for an auto repair loan. While some lenders may require good or excellent credit to get approved, others specialize in working with bad-credit borrowers.
As you shop around, be sure to go through the pre-qualification process to get an idea of your approval odds and potential loan terms. -
What Can an Auto Repair Loan Cover?
An emergency auto repair loan in the form of a personal loan can be used for just about anything you want, so you generally don't need to worry about restrictions. Restrictions on personal loans are usually limited to paying for higher education costs and illegal activities.
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Are Auto Repair Loans Better Than Credit Cards?
If you have good credit, you may be better off applying for a credit card with a 0% APR promotion. However, if your credit isn't good enough to qualify for a 0% APR card, you may be able to get a lower interest rate with an auto repair loan than you would with a standard credit card.Additionally, auto repair loans offer a structured repayment plan, making it easier to budget compared to a credit card with a minimum monthly payment. As you consider your options, think carefully about your needs and goals to determine the right fit for you. -
What Is a Good Rate for an Auto Repair Loan?
The Fed's March 7, 2024, Consumer Credit Report states that the average APR for a 24-month personal loan is 12.35%. That is based on data through November 2023.
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Are Auto Repair Loans a Good Idea?
It depends on multiple factors including how much—if anything—you still owe on the vehicle and the cost of repairs relative to the value of the car. When shopping for an auto repair loan, consider how much your combined monthly payments will be for both the loan and whatever you still owe on the vehicle. Buying a different vehicle might be a more cost-efficient option if the damaged vehicle still has some resale value. -
Will Auto Insurance Cover Repairs?
It depends on the damage and the details of your insurance policy. Collision coverage, if you have it, will cover damage sustained in a traffic accident minus the amount of your deductible as long as the cost of repairs do not exceed the actual value of the vehicle. Mechanical wear and tear not covered by a warranty will not be covered by standard auto insurance.
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Is Car Repair Insurance Worth It?
Repairs not covered by standard auto insurance policies might be covered by car repair insurance, also known as mechanical breakdown insurance. The cost will vary greatly depending on the vehicle and the level of coverage. The least expensive options will be for vehicles new enough and with low enough mileage that such coverage might be redundant. -
Companies We Reviewed
We researched and reviewed 70 lenders to find the best companies you see above on this list. While we write individual reviews for most companies, we do not always write reviews for companies we would not recommend. Below are the companies we researched along with links to individual company reviews to help you learn more before making a decision:
Achieve, Affinity Federal Credit Union, Alliant Credit Union, American Express, Avant, Axos Bank, Bankers Healthcare Group, Best Egg, Bethpage Federal Credit Union, Blue Federal Credit Union, Boatloan.com, Boeing Employees' Credit Union, CapexMD, Citibank, Connexus Credit Union, Discover, Dividend Finance, ENT Credit Union, Fig Loans, First Tech Federal Credit Union, Future Family, GoodLeap, Greenstate Credit Union, Happy Money, Hiway Credit Union, Lake Michigan Credit Union, Laurel Road, LendingClub, LendingPoint, LendingUSA, Liberty Federal Credit Union, LightStream, Lyon Financial, Mariner, Money Key, Mountain America Credit Union, NASA Federal Credit Union, Navy Federal Credit Union, Netcredit, Old National Bank, OneMain Financial, OppLoans, Patelco Credit Union, PenFed, Personify Financial, PNC Bank, Prosper, Reach Financial, Regions, Reprise, Rocket Loans, Santander, Service Federal Credit Union, SoFi, Southeast Financial, Summit Credit Union, SunPower, TD Bank, Teachers Federal Credit Union, Trident Funding, Truist, U.S. Bank, Universal Credit, Upgrade, Upstart, USAA, Vantage Recreational Finance, Wells Fargo.
How We Pick the Best Auto Repair Loans
To evaluate and rank personal loan providers we collected hundreds of data points across 70 lenders, including traditional banks, credit unions, fintechs, and special interest finance companies. We researched and evaluated APRs, loan amounts and terms, fees, customer experience, and much more. To rank the lenders in our database and to generate star ratings, we weighted the data we collected, based in part on what consumers told us were the most important features of a personal loan and lender in a survey we conducted. We grouped those factors into four broad areas:
- Loan costs (advertised APR, fees, and six other factors): 29.25%
- Loan terms (loan amount, repayment term, and three other factors): 22.25%
- Borrowing requirements (credit score, membership requirement, and six other factors): 28.5%
- Additional features (online application, pre-qualification, and eight other factors): 20%
Learn more about how we evaluated personal loans in our complete methodology.
Guide to Personal Loans
Learn more about personal loans:- What Is a Personal Loan?
- How Do Personal Loans Work?
- When Are Personal Loans a Good Idea?
- How to Get a Personal Loan
- How to Apply for a Personal Loan
- How to Use a Personal Loan
- Where to Get a Personal Loan
- Personal Loans Vs. Credit Cards
- Alternatives to Personal Loans
- Personal Loan Calculator
- Personal Loans Methodology
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