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Compare your options for car repair loans
Need to repair your car, but don't have enough cash? We cover your options in this handy guide.
When your car breaks down suddenly and needs urgent repairs, going places and getting things done becomes a lot more difficult. If you don’t have any extra money saved to cover the cost of repairs, then a bad situation becomes worse. Our guide covers the different types of loans you might get to cover your urgent car repairs.
What's in this guide?
- How can I pay for an urgent car repair?
- How these four options compare
- Compare personal loans you can use for car repair costs
- Compare payday loans you can use for car repair costs
- What can I use a car repair loan for?
- Is it worth it to repair my car?
- Alternative ways to pay for a car repair
- Bottom line
- Frequently asked questions
How can I pay for an urgent car repair?
If you don’t have the necessary cash to pay for the repair, your next option is likely borrowing funds. Your credit score plays a big role when looking for the right loan. Poor credit scores can make getting a loan from a bank or a credit union nearly impossible, but even if you have good credit, the time it takes to get approved and receive your funds can leave you stranded for weeks. That’s why loans like payday and installment loans tend to be marketed for emergency expenses like car repairs. What’s more, these types of loans cater to those with good or bad credit scores.
Here are four common ways to pay for an urgent car repair:
An option many people turn to is a payday loan. This type of loan could be a quick way to get the funding you need for a car repair. However, since this kind of loan is often structured for people with poor credit, you’ll probably find that it’s an expensive option. It should be reserved for use in a worst-case scenario when you need cash quickly and understand the interest rates and fees will be excruciatingly high. You will usually have 7 to 31 days to pay back your payday loan.
Your credit card
If you have a credit card with an open credit limit, you could put the cost of a car repair on your credit card. Although you’ll be charged interest for the transaction, it’ll generally be much lower than a payday loan. Keep in mind that credit card interest rates are very high if you don’t pay off your balance when it’s due.
Personal loan or installment loan
If you have good credit, you could get a larger personal loan – just make sure you’re comfortable with the turnaround time. Some lenders may still consider you even with poor credit. A common option for those with poor credit is an installment loan. These loans are similar to payday loans in terms of quick funding and high interest rates, but give you a longer timeframe to repay what you owe – usually 3 to 6 months, instead of just weeks.
Help from family or friends
Finally, if you have friends or family you can trust, consider asking them for a loan. You may be surprized at how willing people can be to get together and help you out in your time of need. Family and friends usually don’t charge interest on what they loan, as long as you pay back in a timely manner. Consider getting in contact with your loved ones and ask if they might be able to help you out with your car repair costs.
- Submit one application to compare multiple lenders
- No application or origination fees
- CERB/EI applicants accepted
Loans Canada Personal Loan
Compare personal loans from a range of lenders and borrow up to $50,000 through this online broker.
- APR: Secured from 2.00%, Unsecured from 8.00% to 46.96%
- Loan amounts: $300-$50,000
- Loan terms: 3 - 60 months
- Fees: No application or origination fees
- Processing time: Receive funds within as little as 24 hours.
How these four options compare
Use the table below to weigh the pros and cons of your loan options.
|Average processing time||Average payback terms||Typical eligibility requirements|
|Payday loan||1–2 business days||7 – 31 days||Age and residency requirements, proof of regular source of income|
|Your credit card||Immediately||Varies||Must have a existing credit card account with an available limit|
|Installment loan||A few days to 2 weeks||3–6 months||Age and residency requirements, proof of regular source of income|
|Help from friends or family||Varies||Varies||None, just be sure to pay back your debts|
Compare personal loans you can use for car repair costs
⚠️ Warning: Be cautious with payday loansPayday loans are expensive. If you're experiencing financial hardship and would like to speak to someone for free financial counselling, you can call Credit Counselling Canada from 8:00am to 5:00pm Monday to Friday at +1 866-398-5999. Consider alternatives before applying for a payday loan:
- Local resources. Government agencies, nonprofits and local charities often offer free financial services and help with food, utilities and rent for those in need.
- Payment extensions. Talk with your bill providers about a longer payment plan or extension on your due date if you're behind on payments.
- Side jobs. Today's digital marketplace offers the ability to more easily sell unwanted items, sign up for food delivery or drive for rideshare services.
Compare payday loans you can use for car repair costs
Check the websites of any lenders you’re interested in to confirm they operate in your province or territory of residence.
Maximum borrowing costsYou should always refer to your loan agreement for exact repayment amounts and costs as they may vary from our results. The table below shows the maximum allowable cost of borrowing under a payday loan for each province:
|Province||Maximum allowable cost of borrowing|
|Alberta||$15 per $100 borrowed|
|British Columbia||$15 per $100 borrowed|
|Manitoba||$17 per $100 borrowed|
|New Brunswick||$15 per $100 borrowed|
|Newfoundland and Labrador||$21 per $100 borrowed|
|Northwest Territories, Nunavut & the Yukon||$60 per $100 borrowed|
|Nova Scotia||$19 per $100 borrowed|
|Ontario||$15 per $100 borrowed|
|Prince Edward Island||$25 per $100 borrowed|
|Quebec||Limit of 35% annual interest rate (AIR)|
|Saskatchewan||$17 per $100 borrowed|
Representative example: Simon’s car breaks down
Simons car broke down on his way to work. Since his workplace is located in a rural area of British Columbia, he needs a car to get there – which means he needs it fixed ASAP. He takes it to a garage and finds out he needs a new transmission, which costs $3,500.00 for both parts and labour. Unfortunately, Simon only has $2000.00 available to spend – which means he needs to come up with the extra $1,500.00.
Since he needs his car immediately, Simon heads online to compare payday loan providers. He knows this is an expensive option, but he is absolutely certain he can pay it off within 30 days as he has a bonus coming from work. He is immediately approved for a payday loan and receives the funds into his account within just a couple of hours.
|Cost of parts/labour||$3,500.00|
|Loan type||Payday loan|
|Cost of loan||$15 per $100 borrowed ($225.00)|
|Loan term||30 days|
|Total loan cost||$1,725.00|
*The information in this example, including rates, fees and terms, is provided as a representative transaction. The actual cost of the product may vary depending on the retailer, the product specs and other factors.
What can I use a car repair loan for?
You can use your loan for any legitimate purpose, which means it will cover any type of necessary car repair, whether it’s for parts or labour.
Some of the most common repairs include:
- Blown transmission. An expensive repair, because replacing the transmission can cost up to $4,500.
- Head gasket. Head gaskets are an essential part of a car’s engine, and repairing it will usually cost you anywhere between $1,000 to $2,000.
- Camshaft. The camshaft controls how much air enters your engine and replacing it tends to be quite labour intensive. This repair will cost anywhere from $1,000 to $3,000.
- Fuel injector. The fuel injector delivers fuel to your engine and will cost around $1,000 to repair or replace.
- Car keys. It might not be a repair, but if you lose a key, it can cost hundreds, if not thousands of dollars to replace a missing key.
It’s helpful to compare estimates from different mechanics before you commit to getting the repairs done. Labour costs vary between different mechanics and shops, so ask for discounts and make sure you find a competitive offer.
As a side note, one way to avoid common repairs is to take your vehicle in for regular maintenance. It might be costly to visit the mechanic when the check engine light comes on, but it may save you money in the long run.
Is it worth it to repair my car?
When you should repair your car
- You’re still making payments. If you’re still making payments on your car, repairing it can save you money – after all, paying down a loan is much cheaper than paying for two cars at once.
- You can afford the loan. If the repairs aren’t too costly and you know you’ll be able to handle the extra monthly payment with your current budget, a loan could be the right option.
- You need your car quickly. Buying or borrowing a new car can take time. If you rely on your car to get around, opting for a couple of days at the mechanic is cheaper than buying or finding a new car.
Reasons to consider getting another car instead
- Your car isn’t worth it. When considering whether or not to opt for a repair, make sure the value of your car outweighs the repair. If not, consider buying a new car.
- You can get a better deal. You might find a car out there that costs less than the estimated cost of your repair. It may take some searching, but getting another car that costs less money than repairing your old car might be a better option for you to consider.
- Your car is damaged beyond repair. If you’ve been in a big accident or your car simply won’t run, then it’s probably time to invest in a new one.
Alternative ways to pay for a car repair
Using a loan or a credit card can be a quick way to cover the costs of your car repair, but it may not be the cheapest. In order to get the best deal, consider some of these alternatives first.
- Before you tow, call around. It’s tempting to have your car towed to the nearest shop, but unless the problem is urgent, you should call at least two or three shops and ask for estimates. Much like comparing loan lenders, this will help you find a competitive deal.
- Request a payment plan. Some mechanics understand that you might not be able to afford to pay your bills on the spot. Ask if they have payment plans, but be sure to get your agreement in writing, and every time you make a payment, keep track of it and acknowledge that you have sent the payment and it has been received. With a payment plan, you’ll have longer to pay for your repairs and get your finances in order without adding extra costs in the form of interest rates and fees from a loan.
- Use your car insurance. If you were involved in an accident, some insurance policies will cover the costs of your repairs. Depending on your insurance policy and provider, you may have zero, partial or full coverage for the repair. Contact your provider to find out if any of the parts or labour can be covered by your policy.
- Are there discounts? Some mechanics have discounts that can reduce the cost of your repairs. When you’re asking for an estimate, be sure to ask if there are any discounts as well.
- Hire a pro-in-training. If your car is suffering from an issue that frequently occurs and you don’t have the money to pay, consider calling a technical or vocational school. Teachers may be willing to check out your car, give their students a lesson and only make you pay for parts.
- Once you’ve found a shop, stick with it. This should go without saying, but your relationship with your mechanic is a crucial component of getting good service at reasonable prices. Find a shop you trust and visit it whenever you have an issue with your car.
It’s important to read real customer reviews before you commit to a mechanic or ask your friends or family for a reputable mechanic. Positive reviews will give you a clear idea as to how your mechanic works, how much they cost and if they’re running a trustworthy business. However, keep in mind that many reviews are left when a person is very happy or very upset, so take each with a grain of salt.
Building an emergency fund
Eventually, the time comes when we all have to pay for car repairs. This is an inevitable cost that all car owners should prepare for, but not everyone has the extra funds to easily build up an emergency fund. Just as you set aside money for gas or groceries, you can also set aside money for a repair.
A good rule of thumb is to have the full amount of your deductible stashed away in a savings account. You can start small by collecting change and putting a few dollars into the account each week. This amount will quickly add up, and it can prevent you from having to take out a loan for car repairs in the future.
It can be devastating to have your car break down and not be able to afford it, but there are loan options for you to consider in order to cover the cost of repairs and get your car back on the road. Compare loan offers and lenders and review all of your options before making a commitment, and most importantly, don’t hesitate to ask for help when you need it.
Payday loans are available in all provinces and territories across Canada. You should be aware that payday loans are regulated by individual provinces, meaning costs and fees can vary. Ensure that any lender you choose abides by the laws of the place you live.
At the time of writing in June 2018, the Yukon, Nunavut and the Northwest Territories do not have legislation regulating payday loans.
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