It is obvious that saving money for a rainy day is a wise decision. We enjoy advising clients to set up an emergency fund in order to be prepared for unforeseen events. Saving hundreds or thousands of dollars can be difficult for many people, as The Atlantic recently reported.
Costly disasters don’t wait. It’s not helpful to be told that you should have anticipated the expenditure months ago when your automobile breaks down. Fortunately, even if you don’t have savings, there are ways for you to pay for car repairs.
There are certain covered services.
After you’ve met your deductible, your insurance company should give coverage for emergency roadside assistance and repair costs if the automobile is damaged in an accident.
You could still be eligible to get free assistance if the car broke down but was not involved in an accident. Check with your motor insurance company first (call the number on your proof of insurance.) Roadside assistance is available to AAA members from reputable companies. Additionally, certain automobile clubs and groups like the AARP offer this perk. Even credit card benefits are sometimes available as forms of roadside help. Additionally, verify with the car dealer where you purchased it (even if you bought it used).
Check your credit card to see what perks are available and what restrictions and exclusions apply. Several major credit card companies and issuers provide emergency road services. Some premium accounts provide this benefit without charge, while others charge every service call. The cardholder is also responsible for any third-party expenses.
How to get the best deal on car repairs
Naturally, you want your automobile fixed as soon as possible so you can get back to your regular routine. Spend some time looking for a decent price. Get at least three quotes from trustworthy repair businesses. Inform them that you are comparing offers and enquire about any promotions they may be running. When you need repairs that are covered by insurance, your insurer will evaluate the damage and pay you what they determine to be the repair’s value. Most of the time, they have to provide you the option of repair shop.
Do we need to lower the cost any more? Call the local technical or vocational schools. You might be able to work out a deal with a teacher to use your automobile in the classroom if they train pupils to work as auto mechanics. Ask the instructor if they will inspect your automobile and allow the students to work on it, how much components will cost, and what will happen if they can’t fix the damage.
Shops that claim to waive your deductible should be avoided. This may or may not be legal depending on where you reside and the policies of your insurance provider. It’s a red flag that the store might not be moral. Some shops exaggerate the cost of repairs to convince insurance carriers to pay more than necessary or to recuperate the money they “save” you by using subpar parts. Although it’s not usually a sign of a dishonest company, waiving a deductible is cause for caution.
Use your credit card wisely.
Let’s say you are unable to borrow money from friends or family members without paying interest. A credit card could be a practical choice if you have one.
If your credit card company provides a warranty against subpar repairs, using your credit card to pay for repair services is a wise choice. You will pay interest if you carry a balance, but you might think it’s an acceptable price to pay to get back on the road. Make a plan for paying off the balance, just like you would for any credit card debt.
[Read also: Putting a Down Payment of $10,000 on a New Car & Credit Card Tips to Boost Rewards]
If possible, avoid cash advances on credit cards. These typically don’t offer purchase protection and have hefty interest rates. A cash advance is subject to interest charges from the day of the transaction by the credit card company. Prior to interest charges starting to accrue on a regular purchase, you have a grace period (often lasting at least 21 days).
How to stay away from predatory lending (bad title loans)
If your credit is bad, you might think about getting a title loan to pay for your repairs. Due to the prevalence of predatory business tactics among title loan providers, this is a difficult position. When a high-cost financial product is sold to those with few options and little in the way of financial resources, it is said to be “predatory.”
Just Say No to Title Loans is related.
The interest rates on title loans are quite high and they are uncontrolled in many states. The average title loan APR nationwide ranges from 300 to 500 percent, and in many locations it exceeds 1,000 percent. If obtaining a title loan is your only viable option for raising the funds required for auto repairs, abide by these recommendations to safeguard yourself:
>>Short term of repayment (but not too short). For most people, nine to twelve months is ideal. That allows you enough time to pay off the debt without refinancing it, but not enough time that the debt lasts longer than the car.
Monthly payment that is affordable. Payment should cover the principal as well as the interest.
A responsible lender will underwrite the loan, which means they’ll check your income and other debts to see if you can afford the payments.
Your bank account should only be accessible upon request. You might feel under pressure from the lender to agree to automatic withdrawals from your bank account. They might charge you more if you don’t want to approve it! Avoid allowing the lender to coerce you into doing something you don’t want to.
Realistic APR. Rates advertised are often monthly, not yearly. The APR should, if at all feasible, not exceed 36 to 40 percent.
For nearly everyone, payday lenders are a lousy idea. Studies have often demonstrated that the cost is significantly more than the borrower anticipates. The typical borrower of payday loans must reapply for his loan eight times before he can effectively repay it. This entails high lending fees and interest rates that can total many times the original loan’s value.
An exchange of money or services
Talking to the vehicle repair business about making payments is a further option for paying for auto repairs. They might provide terms that are equivalent to or better than those you discover elsewhere. If you do sign a contract, adhere to the same rules we outlined previously.
Finally, consider making a barter offer. Do you possess a talent or occupation that the repair company could find useful? You never know what the store owner could need: yard work, building upkeep, child care. You might be able to exchange labor hours to get your charge down to only the cost of the parts.
Whatever arrangement you make, make sure to put it in writing to protect all parties.