Emergencies and unexpected costs are a naturally occurring thing in all of our lives; especially for car owners. This is why you need to have a safety net or plan in place for such situations, as you don’t want to be in a position where you are not ready for such unexpected circumstances.
1. Loans
There are multiple types of loans that can be beneficial in cases like these. First, you can take out a personal loan from a financial institution or a lending agency. Basically, personal loans are loans you take out for any reason and are paid back as monthly installments with added interest. Conveniently, you can find out an estimate of the rates here, along with a local lender. Financing car maintenance has never been easier with such loans.
Most personal loans are not secured, meaning you are given the loan without collateral or without agreeing to put something else on the line (i.e a vehicle, property) if you are unable to pay back the loan on time. That may not be the case, of course, if the individual’s credit score is low. The credit score affects the amount you can borrow; the better your credit score is, the lower the interest rate and the greater the loan amount you can apply for. The best loans are loans with low APR, primarily meaning loans with low-interest rates.
2. Vehicle insurance
Another way you can secure yourself against unexpected car repairs is getting vehicle insurance. Unlike loans, you need to have your vehicle insurance in place before an accident occurs as you can’t apply for vehicle insurance after the vehicle is damaged; you will not be paid for pre-existing damage done to your vehicle.
There are different types of vehicle insurance policies that cover different types of damage. For example, you can find policies that only cover the injuries for drivers and passengers involved in an accident and some policies only cover the party that is not at fault and does not offer coverage for the party at fault.
Other policies may offer coverage if your vehicle is stolen or damaged by fire, but do not cover accidents. Moreover, there are policies that cover fire damage, stolen vehicles, and accidents for all parties involved. However, these policies vary. Make sure you choose the best vehicle insurance policy for you or the one that best fits your needs judging by the obstacles you know you are most likely to face.
3. Emergency Fund
Another way you can secure a sum of money for unexpected car returns is by setting up an emergency fund for situations like these. You need to be careful if you are planning on setting up an emergency fund for your car. What you want to do is to calculate how much you pay for basic repairs and maintenance for your car for a year and keep that in a bank account or saved away and only use it in case of an emergency involving your vehicle. Once you have secured this sum of money, you can start adding to it whenever you can as you never know how big the needed repairs will be.
4. Mechanical Financing
While many forms of financing options for your car repairs fall under the umbrella of loan services, this remains by far the most strategic option to follow. Mechanical financing is basically about getting your car serviced for a belated fee. Its ingeniousness lies in the fact that it cuts the middleman ─ the loan service ─ out and you just end up dealing with the maintenance service itself. Some car service centers offer the belated charge at no interest, while others would be inclined to add interest depending on the make and model of the car. The only downside to this option is the fact that it might take some time for you to locate the service, as it is not provided by all centers.
The bottom line is that owning a car is bound to make you spend some money on repairs and maintenance. Whether it be an unexpected situation or periodic maintenance, you need to be prepared for the financial responsibility of keeping your car up to standard. All vehicles depreciate over time, but the more you are up to date on all your car’s needs, the better the chance of prolonging its usable lifetime. Therefore, you must try to find the most appropriate option from the four ways mentioned above to be sure to help you finance your next trip to the mechanic.