Car troubles can strike unexpectedly, leaving you stranded and stressed, especially when finances are tight. In New Zealand, with its beautiful-but-vast rural landscape, having a reliable vehicle is often essential for daily life, making prompt repairs crucial. If you’re facing an unexpected car repair bill and lack the necessary funds, an emergency car repair loan might be the solution you need. This guide will walk you through understanding car repair loans, how to obtain them, and alternative options to consider.
Overview:
- What are car repair loans?
- How to apply for an emergency car repair loan
- Should I get a car repair loan?
- Tips to manage future car repair expenses
What are car repair loans?
A car repair loan is a type of emergency personal loan designed to cover unexpected vehicle repair costs. These types of loans are intended to provide quick financial assistance to get your car back on the road.
How do they work?
Car repair loans are a short-term personal loan, typically offering smaller loan amounts and repayment periods from 1 to 12 months. These loans can be either secured or unsecured, depending on the lender and your individual circumstances. A secured loan requires collateral (such as a vehicle), but may also offer lower interest rates and a better approval rate. An unsecured loan does not require any collateral, but may come with higher interest rates and stricter eligibility requirements.
At Swoosh, our loans are secured so we can lend to a wider range of borrowers, regardless of their credit histories. Contact us today or apply online to get started!
How to apply for an emergency car repair loan
Each lender will have their own application process and eligibility criteria. However, when applying for a car repair loan the general steps will include:
1. Assess the repair costs
Obtain a detailed quote from a reputable mechanic to understand the exact amount needed.
2. Evaluate your financial situation
Review your income, expenses, and existing debts to determine how much you can afford to borrow and repay.
3. Research and compare lenders
Look for reputable lenders in New Zealand that offer emergency car repair loans. Consider factors such as interest rates, repayment terms, and customer reviews.
4. Check eligibility criteria
Check the eligibility criteria of the lender you would like to apply with and ensure you meet their requirements. Every lender will have their own lending criteria, but at Swoosh our eligibility requirements include:
- Being at least 18 years old
- Employed for at least 3 months (earning a minimum of $400 per week)
- Being a New Zealand citizen or permanent resident
- Owning a vehicle registered in your name, which will be used as security for the loan
5. Prepare any necessary documentation
Most loan applications will require some documentation and it’s best to have these ready to go before you apply. This will help to ensure your application goes as smoothly and quickly as possible. Common documentation needed includes:
- Proof of income — such as payslips
- Identification — including a driver’s license or a passport
- Proof of address — for example utility bills or bank statements
- Your bank New Zealand details — for loan disbursement
6. Apply for the loan
Complete the application process, which can often be done online. It’s important to provide accurate information to increase the chances of approval.
7. Review the loan agreement
Carefully read the terms and conditions of your loan agreement before signing, ensuring you pay special attention to the interest rate, fees, and repayment schedule.
8. Receive funds and pay for repairs
Once you have been approved and signed the loan agreement, the funds are typically deposited into your bank account promptly, allowing you to pay for the necessary repairs.
9. Repay your loan
Once you have received your funds, you will need to begin repaying your loan. Remember to make your repayments on time and communicate with your lender immediately if you’re unable to make a repayment.
Should I get a car repair loan?
Whether or not you should get a car repair loan depends on your financial situation and available alternatives. A loan can be a good option if:
- You need urgent repairs to keep your car running for work or essential travel
- You can comfortably afford the repayments
- You have limited alternatives, such as savings or a credit card with lower interest
However, it’s important to always compare lenders and read the terms before deciding.
Alternative options to a loan
As well as comparing lenders and loan terms, you should also consider alternatives to a loan. Some alternatives include:
- Your savings: if you have emergency savings, consider if it would be best used for these repair costs.
- Credit card: a credit card may be a viable option for smaller repair bills, especially if you can repay the amount quickly to avoid high interest charges. However, it’s important to be careful with credit card use as spending can quickly become out of control making it harder to pay off the credit card in time.
- Payment plans with mechanics: some repair shops may offer payment plans or financing options, allowing you to spread the cost over time. Talk to your mechanic before applying for a loan and see what options they may have available.
- Borrowing from family or friends: If feasible, this can be a low-cost option, but ensure clear terms to maintain healthy relationships.
Looking to boost your savings by earning some extra cash? Check out our blog How to Make Money Online NZ for tips and tricks on how to earn money online!
Tips to manage future car repair expenses
Sadly, it’s inevitable that all cars will eventually need some kind of repair and this can be pretty stressful. But there are some things you can do to make it easier on yourself in the future:
Regular maintenance
Routine servicing can prevent major issues and extend your vehicle’s lifespan.
Build an emergency fund
Building a savings buffer can provide financial relief during unexpected events. Set aside a small amount from every paycheque and soon you’ll find you have a nice little buffer to help see you through unexpected expenses.
Learn the basics for DIY repairs
Learning how to perform small, basic repairs or maintenance may help to keep car costs down over time and prevent larger repair costs in the future.
Don’t be afraid to shop around
It can be tempting to settle for the first mechanic you find, but it’s important to shop around and gather a few quotes so you can ensure you’re not spending more than you have to.
Understand how much things cost
Take the time to research how much common repairs generally cost. This can be helpful when budgeting for future repairs and is also helpful when gathering quotes from mechanics to find the best deal.
Facing unexpected car repairs can be daunting, but luckily there are several ways to get the funds you need. Whether through an emergency car repair loan or alternative means, make sure you assess your financial situation, research your options, and choose the solution that best fits your needs. And remember that regular vehicle maintenance and budgeting can help prepare you for emergency costs like these in the future!
Need a little extra to get you back on the road? Swoosh is here to help!
We know how important it can be to have a reliable vehicle to get you from A to B. That’s why Swoosh offers fast, easy emergency car repair loans from $2,000-$5,000. With our 100% online application process and simple eligibility criteria, we’ll get you back on the road in no time! Apply online today.
