How do you pay for auto repairs when you do not have enough money?

Many of us drive to work in order to earn an income. Taking the train, subway, or bus is just not an option for many commuters.

A sudden breakdown could mean a day or more of lost wages. How do you find the resources to pay the mechanic, and get your clunker back on the road?

Tap into three different resources to help fix your ride.

  1. Financing programs such as loans, credit cards, and payment plans
  2. Financial assistance options for low-income families
  3. Warranty and insurance coverage for accidents and breakdowns

Automotive Repair Financing & Loans

Emergency auto repair loans get your car back on the road quickly when you have to pay out-of-pocket. They help people fix their jalopy when they do not have enough money in savings. Avoid missing time at work or losing a job because of a breakdown.

The four primary categories are emergency loans, no credit check financing, shops that offer payment plans, and credit cards.

Emergency Loans

Request an emergency car repair loan here. Yes, they do exist. Drivers can often obtain a quick approval for an unsecured contract. With an unsecured loan, you avoid several time-consuming paperwork requirements. This enables you to get the money quickly.

  • No need to verify ownership of collateral
  • Skip having to certify the value a pledged asset

If eligible, online 3rdparty lenders can deposit money directly into your bank account within a short period. These factors help your cause and speed up the process.

  • Income from employment
  • Enter banking information
    • Routing and account number
    • Verify your identity
    • Enable lender to wire money
  • Permit monthly drafting to ensure prompt payment

No Credit Check

Auto repair financing programs with no credit check can help drivers with a bad credit history. Members of these specialized finance company networks do not pull a copy of your consumer report.

Online no credit check companies utilize alternative information sources to make an underwriting decision. In addition, they secure the contract with collateral. The collateral may be the wholesale value of the automobile or the person’s next paycheck.

Title Loans

Title loans offer bad credit motorists a way to finance auto repairs. Many title companies do not pull a copy of your consumer report or look at your FICO score.

Instead, they make an underwriting decision based on three other factors.

  1. Pledge the wholesale value of your car as collateral
  2. Have the capacity to repay based on earnings and job history
  3. Request the amount of money needed to fix your transportation

You must own the vehicle outright and have possession of the printed title. This gives the company the right to repossess the asset in the event of default. If you drive to work, this option may not be for you.

Payday Loans

Payday loans offer bad credit drivers a second way to finance auto repairs. Most payday companies also do not pull a copy of your consumer report or check your FICO score.

Instead, they secure the contract with your next paycheck. The fees are relatively modest. However, they add up quickly if you roll them over too often. Make sure you can retire the obligation in one or two payroll cycles at most.

If you need your ride back in order to commute to work, the fees may be much smaller than any lost income. In addition, losing a job due to an extended work absence could be catastrophic.

Shops That Take Payments

Finding auto repair shops that take payments instead of cash upfront is hit or miss. Most shops and garages employ mechanics and service advisors who are experts in one thing.

  • Diagnose the mechanical problems
  • Make maintenance recommendations
  • Prepare an estimate of the cost
  • Replace broken or worn out parts

Bad credit borrowers are tricky to handle. Most shops do not employ banking experts who know how to run a payment plan profitably. It makes little business sense to offer this service when 3rdparty companies specialize in this area.

Therefore, motorists often fare better by working through a finance company. Make finding an honest and reputable service center or dealer the main priority over one that accepts monthly payments.

Credit Cards

Paying for car repairs with a credit card works provided you have sufficient “open to buy.” Open to buy is the difference between the account limit and the balance.

The limit is a preset cap on balances based on your credit score, account usage patterns, and payment record. The balance rises each time you make a purchase, and when the bank charges interest. The balance falls when you make a payment.

  • The cost estimate is less than open to buy. The shop will be happy to swipe the plastic card and accept money from the bank as full reimbursement.
  • Cost estimate exceeds the open to buy. The bank will reject any single transaction that exceeds this amount. Drivers will have to find an alternative way to compensate the shop for their work.

Credit card balances affect your ability to finance future auto purchases and maintain the jalopy in the interim. Be careful not to put yourself into too much revolving debt.

Car Repair Financial Assistance Low-Income Families

Government programs and charitable organizations often provide financial assistance to low-income families. Only a handful offer help with car repairs directly. The remainder simply attempts to support this needy population with general everyday needs.

Reliable transportation is critical for employment, which lifts people out of poverty over time. Therefore, expect to find resources – even if they are not earmarked for this purpose.

Government Grants

Federal and state government grants for car repair are very difficult to find. Funding comes and goes. In addition, the process takes too long. Finally, the programs that do exist primarily deal with air quality rather than breakdowns, and other mechanical failures.

Federal Programs

The federal government grant programs rarely help with an auto repair. Be careful about other online resources suggesting otherwise. You should look elsewhere.

  • The Federal Transit Administration previously ran the Job Access and Reverse Commute Program (JARC 5316). The JARC grant addressed the unique transportation challenges faced by welfare recipients and low-income persons seeking to obtain and maintain employment. However, as of early 2018, the program has expired.1
  • The Department of Health and Human Services (HHS) manages the federal government grant programs. Most involve an extensive application and long approval process. Most people need their ride fixed within days, not years.2
  • The HHS website contains an extensive section warning consumers about grant scams. Be wary. Fraudsters often promise access to free money to rip off needy people.

Department of Motor Vehicles

In many states, the Department of Motor Vehicles (DMV) offers emissions-related vehicle repair assistance. In other states, a different agency may administer the program.

For example, both California and Texas offer monetary help to low-income drivers whose cars failed emissions testing. The goal is to improve air quality. You may be eligible for two types of benefits.

  • Money for smog-related maintenance
  • Incentives to retire a gas-guzzler

Department of Human Services

In many states, the Department of Human Services (DHS) offers grants, cash assistance, and other forms of financial help for low-income families and other vulnerable populations.

Each state DHS agency runs unique programs targeting a variety of needs. Help specifically with car repair is available only in a few states. For example, many non-government online resources suggest that the Michigan DHS offers a voucher program.

  • $2,000 towards a purchase the family can afford
  • $900 towards work to make a clunker roadworthy

Most state DHS agencies administer the Temporary Assistance for Needy Families (TANF). This welfare program offers cash benefits for food, clothing, shelter and other needs. The government encourages welfare recipients to work in order to become self-sufficient.

Access to reliable transportation is often a barrier to employment. Therefore, working families can use a portion of their welfare money to fix a motor vehicle.

Charitable Organizations

Private charities and faith-based ministries are often better for vehicle repair assistance. Low-income families should research the local organizations offering to help in this area.

Each organization targets the population segment most important to its mission.

  • Single mothers are favored by many faith-based ministries
  • Disabled veterans find help from other retired service men and women

The number of entities, the individuals they seek to help, and the geographies they cover are too numerous to list in this article. Other online resources do a good job of compiling these data.

  • Workingcarsforworkingfamilies.org provides a geographic database
  • Angiesangelhelpnetwork.com also lists a variety of resources

Auto Insurance: Accidents, Breakdowns, and Warranties

Three different forms of automobile insurance may cover a costly repair. In most cases, it is far more affordable to have a third party picking up most of the expense. This clearly beats paying for the work out-of-pocket.

Before reaching into your own pocket, pull out your files and read the fine print on any auto insurance, mechanical breakdown coverage, and warranty program paperwork.

Automobile Insurance

Automobile insurance is the place to turn for help in repairing your car after an accident. Anyone involved in a fender-bender should read his or her policy right after the tow truck hauls the wreck off to the body shop. Get the ID card of the other driver involved in the wreck.

Several features outlined in your policy will determine whether you might pay the garage yourself instead of insurance.

  • Deductible amount defines the amount you must fund before the policy kicks in
  • Optional collision coverage reimburses for damages due to the fault of the insured driver in a crash – if you have it
  • Optional comprehensive coverage reimburses for damages caused by acts of God and other non-crash incidents – if you have it
    • Theft
    • Fire
    • Floods
    • Hail

Leasing and financing companies require motorists to keep the optional collision and comprehensive coverage in force. This protects the value of their collateral. However, many people drop the coverage once they retire a note in order to reduce monthly premiums. Therefore, verify coverage details.

Filing a claim can affect future premiums. Many carriers price premiums based on driving records and claims experience. Therefore, some motorists choose to pay the service center out-of-pocket instead of through insurance. This happens most when the claim is small relative to the possible premium increase.

New Car Warranty

Most automotive manufacturers offer new car warranties. If your vehicle is relatively new (under 5 years or 100,000 miles), read your dealership paperwork carefully. The manufacturer may cover certain repairs.

Each manufacturer offers a unique set of benefits built into the sticker price. Most provide two types of coverage that offer peace-of-mind to shoppers.

  • Bumper-to-bumper spans a shorter period and fewer miles
    • Powertrain
    • Electronics
    • Audio
    • Heating and air conditioning
    • Suspension components
  • Drivetrain coverage has a longer time span and higher mileage cap
    • Engine
    • Transmission
    • Differential
    • Driveshaft
    • Velocity joints

Check the warranty language about ownership transfers if you bought a pre-owned vehicle. Many original warranties expire or modify when the original owner sells the car.

Breakdown Insurance

Mechanical breakdown insurance and extended warranties supplement the original car warranty. You must purchase this policy before the vehicle reaches a certain age and/or mileage. Both plan types cover repairs on major parts failures.

  • Engine
  • Drive axle
  • Transmission
  • Steering
  • Suspension
  • Cooling and heating

Each policy type will not cover routine maintenance and normal wear and tear. You must pay for threadbare tires, worn out brake pads, oil changes, dead battery, etc.

Only property and casualty companies can offer a mechanical breakdown plan. This allows you to combine coverage into one premium, and have one place to call in case of a claim. A wider array of companies market extended warranties.

Sources:

  1. Federal Transportation Administration
  2. Health and Human Services
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