Tips

Should I Take Out a Payday Loan to Finance My Auto Repair?

The short answer to whether you should take out a payday loan to finance your auto repair is only as a last resort. Still, some people don’t have a choice and there are instances where a payday loan might make sense. Before you take out any loan, make sure you take your vehicle to a reputable and experienced auto shop like Mechanic One Auto Repair & European Auto Repair. Experienced auto technicians know how to keep your auto repair costs as reasonable as possible.

Payday Loan Basics

Payday loans are also called cash-advance or check-advance loans and they are based on your weekly, bi-monthly, or monthly paycheck. The amount a payday lender is willing to give you depends on the lender himself or herself and how much you make each pay period. A payday lender will not loan you more than your paycheck in most cases because you will be expected to pay the loan back the payday immediately following the date the money was loaned to you.

The lender will either take a post-dated check for payment of the loan and interest or automatically debit your bank account on payday. You must provide payment using one of these methods or the lender will not loan you the cash. You will pay back both the money borrowed plus interest, and here is the primary disadvantage of a payday loan: The interest rates are unbelievably high. Credit Karma reports that some payday lenders attach as much as 400 percent interest to payday loans, which easily makes the loan impossible to pay back on your next payday.

When a Payday Loan Makes Sense

There is one time when a payday loan to pay for your automobile repairs might make sense, however, so let’s present that scenario. Imagine your vehicle breaks down a few days before payday. You spent the money left over after bills from your last paycheck to take your mother out to dinner and a show for her birthday. This is an unusual expense. Usually, you have a few hundred bucks to play with each month. Your mechanic estimates the repairs at $200; you can easily take that hit plus interest on the next pay period. This is when a payday loan would make sense if you had no other option. 

With money in hand, you can take your vehicle to an experienced auto repair shop like Mechanic One Auto Repair & European Auto Repair in Canton, MI. Call us today at 734-237-6953 for an appointment.