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Car repair loans

Get the finance you need to get your car back on the road.

Until it breaks down, it’s easy to forget how much you rely on your car to get around. However, when your vehicle is off the road and in need of repair, even the simplest of everyday tasks can become a major hassle.

Of course, it’s not always easy to find the money you need to get your car running again – which is where a car repair loan can help. Let’s take a look at the car repair finance options available and how you can decide which one is right for you.

How much do car repairs cost?

There’s no such thing as an average car repair cost. Expenses vary greatly depending on the make and model of vehicle; what is wrong and what mechanic you choose to repair it. Even though automotive technology has come a long way in the past few decades, when cars break down they can be costly to mend.

Common issues that you may need to repair are:

Unless you have comprehensive car insurance, the cost of repairing anything from a relatively minor ding through to significant body damage can be surprisingly high. To give you an idea of the potential costs, back in 2012 the Insurance Australia Group’s (IAG) Research Centre (Kiwis have IAG New Zealand) compared repair costs for popular small cars involved in a simulated 10km/h collision. The Toyota Yaris was the most expensive to repair, with the combined total to fix the front and rear damage coming in at AUD$13,440, or more than 70% of its original purchase price. Even the cheapest car on the list, the Holden Barina, still cost AUD$2,574 to repair.

The radiator helps to keep the engine cool. If you have a radiator leak, and loose coolant, the engine may overheat. Replacing your radiator may cost between $300 and $500.

You don’t need to be a rocket scientist to know that a mechanically sound engine is crucial to your car running smoothly. Servicing costs vary greatly depending on the issue plaguing your engine, but if you suffer a blown engine and it needs replacing, the bill could be between $4,000 and $8000.

The transmission is crucial to the effective operation of your car, so it can lead to significant mechanical problems if something goes wrong with it. Servicing may cost $230 to $300, but if you don’t maintain your car properly and the transmission fails it could set you back between $4,500 and $6,000.

The head gasket is another critical part of the inner workings of your car, sealing off the cylinder head from the engine block and preventing oil and coolant leaks. A blown head gasket can cause a lot of damage to your car – potentially $1,000 worth.

These are just a few mechanical and body issues that could affect your car and the older your vehicle is, the higher the chance of something going wrong. Add in the extra cost of, for example, roadside assistance, towing expenses and the cost of ordering spare parts from another city or overseas, and you may be looking at a sizable car repair bill you cannot afford.

⚠️ Warning: be cautious with short-term loans

If you're experiencing financial hardship and would like to speak to someone for free financial counselling, you can call the MoneyTalks helpline operated by FinCap on 0800 345 123. It is open from 8:00am to 5pm, Monday to Friday and 10am to 2pm Saturday. When comparing short term loans, ensure you take into consideration any fees, charges and rates you may be charged.

Alternatives to short-term loans

Consider these alternatives before applying for a payday loan:

  • Use online Government resources. The Commerce Commission New Zealand website explains how loans works and what to be aware of when borrowing from a lender.
  • Payment plans. Talk to your electricity, gas, phone or water provider to see if you can work out a payment plan or receive an extension on your due date if you’re behind on payments.
  • Contact your creditors. Speak with creditors about extending the due date of your payment, or working out a new payment plan that works for both of you. Seek personal loans elsewhere. Consider a small personal loan from a bank or a credit union. You may qualify for a loan with much lower interest rates than those offered by payday loan companies.
  • Pay with credit card. Consider paying with your credit card to cover your emergency bills or payments. This is not a long term solution, as you’ll need to pay off the balance as soon as possible, but it’s an alternative to a short term loan with high – and immediate – interest rates.

Short-term loans you can use for car repair

Name Product Max Loan Amount Loan Term Turnaround Time Loan Interest Establishment Fee Account Administration Fee
Save My Bacon Mini Loan
$750
1-8 weeks
Same day
49.95% p.a
$95
$10
Eligibility: Be 18 or over, have an income of at least $400 per week and be a NZ citizen, permanent resident or have a valid work visa.
Short term loans up to $750 with no hidden fees.
Moola Payday Loan
$1,500
Up to 184 days
Within 60 minutes
292% p.a.
$0
N/A
Eligibility: Be 18 or over, be in employment and be a New Zealand citizen, permanent resident or have a valid working visa.
Borrow up to $1,500 and enjoy a flexible repayment plan.
Save My Bacon Flex Loan
$5,000
8-52 weeks
Same day
49.95% p.a
$95
$10
Eligibility: Be 18 or over, have an income of at least $400 per week and be a NZ citizen, permanent resident or have a valid work visa.
Medium term loans from $1,000 to $5,000 with no hidden fees.
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Compare up to 4 providers

Car repair loan options

Are you facing an expensive car repair bill to get your car back on the road? If so, there are several finance options available to provide the funds to cover your costs. Check out the car repair loan options in the table below:

Loan typeFeaturesProsCons
Secured personal loanA personal loan that you guarantee with an asset, for example, your car. Loans of up to $150,000 and terms of up to 7 years available, (NZCU South offer a maximum loan term of 10 years).
  • Lower interest rates
  • You can secure the loan with a range of assets
  • Fixed rates available
  • A wide range of lenders and loans to choose from
  • Use the funds however you like
  • Need to make sure you can afford principal and interest repayments
  • Fees and interest apply to your loan
  • Penalties if you miss payments
Unsecured personal loanBorrow the money you need to pay for car repairs without having to offer an asset as collateral. Loan amounts of up to $70,000 and terms of up to 7 years available.
  • No security required
  • Lower interest rates than payday loans
  • Use the funds however you like
  • A wide range of lenders and loans to choose from
  • Easy to apply
  • Higher interest rates than a secured personal loan
  • Higher fees (than a secured loan) apply
  • Penalties for missed payments
Short-term loanSometimes referred to as a payday loan; they provide instant access to money to see you through until your next payday. Loans of up to $5,000 are available with short loan terms ranging from 2 days to 2 years.
  • Fast access to money when you need it
  • Easy application and approval process
  • Minimal credit checks
  • Use the funds how you like
  • Fixed repayment schedule, so you can budget ahead
  • High-interest rates
  • High fees
  • Need to watch out for unscrupulous lenders who prey on desperate borrowers
  • Essential to assess whether you can afford this type of loan before you apply
Credit cardIt can be worth considering if the card issuer offers an introductory interest-free or low-interest period, and you can realistically afford to pay off the repair bill within the promotional time frame. Amount available varies depending on your credit limit.
  • Simple and convenient
  • 0% or low interest if you pay off your debt before the promotional period ends
  • Plenty of options to choose from
  • High-interest rate applies if you don’t pay off your debt within the promotional period
  • Penalties if you miss payments
  • Paying for repairs with a credit card may attract a surcharge
  • You may not have enough remaining balance on your credit card to use it for other purchases

How to compare car repair loans

Make sure you consider the following features when weighing up your car repair loan options:

  • Interest rate. Compare interest rates across a variety of loans to work out how much you’ll pay in interest charges.
  • Fees. From application and establishment fees to ongoing costs and missed payment charges, make sure you’re aware of the additional expenses that may apply. Consider fees alongside the interest rate to calculate the total cost of car repair loans.
  • Repayment schedule. Find out how much your regular repayment is and how often you have to make payments? Is this figure something you can regularly afford to pay?
  • Repayment flexibility. Can you make additional payments to pay off the debt ahead of schedule? This feature could save you in interest charges if you come into some extra money and can afford to repay the loan sooner.

Repairing vs replacing

If you’re stuck with a hefty car repair bill totalling several thousand dollars, it might be time to look at alternative options. In some cases, you may find you’re better off upgrading to a new vehicle rather than forking out a lot of cash to repair your current set of wheels.

If buying a new or used vehicle is a better solution, and you need finance, start comparing car loans at finder.com/nz today.

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