Just when your bank account finally rebounded from your car purchase, you get hit by an unwelcome surprise. A breakdown, check engine light, or mysterious engine noise forces your car into the shop. The mechanic takes a quick look, gives you the repair estimate, and all you can see is your hard-earned money going down the toilet. The problem with car repairs isn't just the sky-high bill, but also the unpredictable nature of the expense. Not having the cash on hand to cover the repairs can be stressful, especially if the vehicle is undrivable. See the average car repair costs, how to approach financing the car repair, and how to prepare for future repair costs.

Average Car Repair Costs

Mechanic working on car repair

Most drivers expect a hefty repair bill after an accident or a vehicle breakdown, but according to CarMD, costly repairs aren't limited to these dramatic events. Even the average check engine light repair can cost hundreds, if not thousands, of dollars. The most common check engine light vehicle repair in 2019 was 'Replace Catalytic Converter(s) with new OE Catalytic Converter(s)' with a total average repair cost of $1,375.70. Other expensive repairs included 'Replace Fuel Injector(s)' for $457.07 and 'Replace Ignition Coil(s) and Spark Plug(s)' which totaled an average of $386.89. 

When a car breaks down or is involved in a fender bender, there will often be multiple repairs that must be made and the costs can quickly add up. For example, insurance.com reports that without collision coverage, replacing a dented bumper can range anywhere from $450 to thousands of dollars depending on the vehicle, a windshield replacement averages $410, and suspension damage can result in costs up to $5,000. 

Car Repair Financing Options

personal loan for car repair

Even if you stay on top of routine maintenance, it can be impossible to predict when car trouble will sneak up on you. We all know we should be saving for a rainy day, but statistics show many Americans don't have enough to cover an emergency expense. According to Bankrate, nearly 28% of U.S. adults don't have any emergency savings at all, and only 41% would be able to cover a $1,000 emergency according to CNBC. This poses a concern for car owners who find themselves looking at a repair bill that exceeds their savings account. Apart from borrowing money from family and friends, the two main options for financing a car repair are: taking out a loan or using a credit card. 

emergency expenses infographic
Less than half of Americans can cover a $1,000 emergency expense with savings. (source: CNBC)

Personal Loans

One of the most common ways to finance a car repair cost is by taking out a personal loan. Personal loans can be secured (the lender holds collateral until the loan is paid off) or unsecured (the borrower gets the funds without any collateral at stake). Unsecured loans are less risky, but the trade-off is a higher interest rate.

Traditional banks, credit unions, and online lenders offer personal loans that can quickly provide the funds needed to repair your car. Although this type of loan involves less risk than payday or title loans, it's important to be aware of all the fees involved. Car owners with bad credit may not be approved for a personal loan or face a very high APR rate. According to Value Penguin, the average interest rates on personal loans in 2019 ranged from 10% to 28% depending on credit rating.

payday loans
Payday and title loans offer fast cash, but you need to be aware of the risks.

Payday and Title Loans

If getting a personal loan isn't possible, payday and title loans can serve as alternatives to cover a car repair expense. With a payday loan, you borrow money against a future paycheck by providing a post-dated check or allowing the lender permission to make a withdrawal from your bank account. You may have to pay the full loan balance, plus fees by your next payday. According to Credit Karma, the APR rates for this type of loan can reach over 400%, and you may be charged extra fees if you don't pay the lender back by the next payday. 

A car title loan is another risky way to cover car repair costs. A title loan means your car becomes collateral for a small loan amount with an average of about $1,000. Most lenders will offer anywhere between 25-50% of your car's value. Although you'll get the money fast, there are serious drawbacks including the possibility of car repossession and astronomical APR rates as high as 300%.

paying for car repair with credit

Credit Cards

Most car owners who did not have saving to cover a car repair, reported using a credit card to finance the expense. Although this option is convenient and less risky than payday or title loans, it can be very expensive. Credit Karma provides an example: "With an APR of 15% with a $25 per month payment, a $1,000 repair can take you 56 months to repay and cost you almost $395 in interest. At 20% APR, it would take 67 months to pay for the repair and cost you almost $662 in interest". The high APR rates for credit cards can mean paying nearly as much interest as the repairs themselves.

Before handing your current credit card to the mechanic, it's a smart idea to look into opening a new credit card with a 0% introductory APR rate. Usually, the special introductory rate lasts between 12-21 months, and if you pay off the balance before then, you'll finance the repair in the most affordable way.

How to Prepare For Car Repair Expenses 

saving for car repairs

The best way to avoid the stress of emergency car repair costs and risky financing options is to be prepared. To protect yourself from being blindsided, AAA recommends setting aside $50 per month to cover the cost of emergency car repairs and following the recommended maintenance schedule from the manufacturer. It's also important to find a mechanic you trust and get a written estimate for unanticipated repairs. Ask the mechanic about any discounts or payment plans they offer to lessen the burden and don't be afraid to negotiate some of the costs.

For even more peace of mind, some insurance companies offer car repair insurance coverage. According to Wallethub, car repair insurance is comparable to the extended warranties you can get from the dealership or automaker. This type of coverage will pay for mechanical repairs and only applies to relatively new vehicles. Once a car is over 7 years old or surpasses 100,000 miles, the coverage is no longer valid. Because older vehicles usually require the costliest repairs, this type of insurance isn't the best value for most car owners.