Need to repair a car?

A car repair loan is a short- to medium-term personal loan (usually $500 – $10,000) earmarked for unexpected vehicle repairs—broken transmissions, failed brakes, new tires, or any fix that can’t wait until payday. Unlike an auto-purchase loan, the money isn’t tied to the car’s title; funds go straight to you (or your mechanic) and you repay in equal installments over six to thirty-six months.

How a Car Repair Loan Works

You apply online or at a branch, detailing the repair estimate and providing proof of steady income. Upon approval, the lender deposits funds into your bank account—sometimes within hours—or pays the repair shop directly. Because the loan is unsecured, you keep your vehicle title free for future refinancing or sale once the work is done.

Rates are higher than a secured auto loan but far below payday-loan fees, and the fixed schedule lets you budget around predictable monthly payments instead of a single, massive mechanic bill.

When a Car Repair Loan Makes Sense

• You need your vehicle for work, school, or family commitments and can’t afford downtime.
• The repair quote is larger than your savings but small enough to repay within two to three years.
• Your credit cards are maxed—or their interest rates are higher than the personal-loan rate on offer.
• You want to avoid a payday loan’s cost or risking repossession by adding more debt to an auto-purchase loan.

Eligibility & Documentation

• Government ID (driver’s licence or passport)
• Most recent pay stub or two months of bank deposits
• The repair quote or invoice (not always required but strengthens the application)
• Proof of vehicle ownership and insurance (for direct-to-mechanic funding)

Lenders focus on your debt-to-income ratio and credit score (580 + opens many doors, 660 + gets better rates). Some credit unions will look past a bruised score if your recent banking history is strong.

Costs Beyond the Interest Rate

Expect a small origination fee (1 – 3 % of the loan) or a flat administration charge. Late-payment fees apply if you miss your due date, and NSF charges stack up quickly if automatic withdrawals bounce. Ask for the “total cost of borrowing” in writing before you sign.

Alternatives to Consider

• Manufacturer or dealership repair financing (often 0 % for 6–12 months on certified parts)
• A low-interest line of credit or overdraft
• Using a 0 % balance-transfer credit card and paying the repair off before the promo ends
• Local credit-union emergency loans, which sometimes waive fees for essential repairs

Frequently Asked Questions

How fast can I get the money?
Many lenders issue same-day decisions and fund within 24 hours once documents are verified.

Will the mechanic wait for payment?
Most shops require a deposit or full payment on pickup. Ask if they accept direct payment from the lender; many do.

Can I repay early?
Most Canadian personal loans allow prepayment without penalty; extra payments go straight to the principal.

What if the repair costs less than the loan?
Apply only for the estimate you need. If you borrow more, you’ll pay interest on the unused cash unless you return it immediately—check your lender’s partial-refund policy.

Does the loan improve my credit?
Yes—on-time payments are reported to the credit bureaus, helping build or repair your score.