Car repair loan

By Mozo ·

If you can’t afford to upgrade or trade in, repairing your car for any major dings or mechanical problems may be the way to go. But this can come with quite a price tag... 

So what's an option? A car repair loan!

Car repair loan options 

Say your average full service costs around $500, you can only imagine what a minor repair might cost, let alone a major one. And if it’s not the right time to say goodbye to your vehicle then taking out a car repair loan may be the best thing you can do. Here’s a list to get you started: 

  • personal loan (great option) 
  • credit card (okay option) 
  • payday loans (bad option) 

But how good is a personal loan and how bad is a payday loan? We’ve weighed them up to give you a better understanding of what your loan options are for car repairs.

Loan type Pros Cons
Personal loan Whether you choose a secured or unsecured loan, you’re sure to seal yourself a reasonable and affordable deal. Expect to pay anywhere between from around 4% to 20%.  Miss a payment, even one, and not only will you be charged a late fee, but a strike against your credit history.
Credit card Can be a pretty good option if your first year is 0% or a fairly low interest, but what about the following year? A good option if you plan on repaying your debt within the promotional time-frame. Just like a personal loan, expect to suffer the consequences if you miss a payment. Didn’t finish paying the debt within the promotional period? Expect to pay up to 25% the very day after your promotional period has ended.
Payday loan Instant dollars (up to $1000)  to get you through until your next payday, if you’re running short of a few bucks and especially if you need that repair booked right away. Preying on the vulnerable, payday loan lenders offer quick solutions for when you’re at your weakest and need a super fast solution. However, they have the highest rate around. At first glance they may seem comparable to a high credit card at 20%, but you’ve usually only got 2 weeks to pay. If you don’t pay off your entire loan by the agreed time, you will have to pay a further 20% on top. Take another 2 weeks to pay and accrue another 20%.

So as you can see, although you can save on interest in the first year by signing up with a credit card that has a 0% promotion, you’ll get stuck with high interests in the subsequent years after the honeymoon period has ended if you don't pay down your debt. And while a payday loan sounds promising at first, it has a nasty bite if you don’t pay off your debt within the typical 14 days. This can have you paying hundreds or thousands of dollars more than the original value. Mozo recommends you stay well clear of payday loan options. 

The personal loan however, seems to offer a more rounded approach to manage your debt with a better average on the interest rate charged, so you’ll be paying less in the long run, even though the first year may be higher than a credit card with 0% promotion. 

Tips on cutting down your car repair bill 

It's no secret that repairing a car can be costly. So with that in mind, let’s explore a few ways you can reduce your car repair costs, even if it’s a short term fix.

  • Dealership repair vs local panel beater - yeah it’s pretty cool getting served an espresso and a fancy cookie just for stepping into your dealership, but wouldn’t it be nicer saving hundreds of dollars by going to your local service team? With the money you save on your repair, you could buy an espresso machine for your home and a fine selection of biscotti from the deli round the corner. 
  • Less is more - well sort of. So you ignored your sensor beeping madly and backed into that pole that you didn’t see. It happens! Now your tail light’s out and you’ve got a ding you can’t stand. But it’s going to cost more than you can afford right now. Instead of feeling desperate to iron out that mess, prioritise and split up your expenses. The tail light legally must get fixed, so do that first. Then when you’ve saved up a bit of cash or paid off some of your credit card debt, splurge on getting the rear end smoothed out to perfection then. There’s no real reason to get it all done at once. 
  • Shop around - rather than going with the first mechanic you see, it might be worth your while to ring around and ask for a ‘roundabout quote’. Yes, many will hesitate to give you a quote over the phone but you’re just wanting to gage at least a starting price. This is of course if it’s obvious to you what’s wrong with the car. If it’s not exterior and more mechanical, you may need to go in person and take the car in. Remember, don’t feel obligated to go with any one mechanic or panel beater. Build up the confidence to shop around for the best deal, by doing this you will almost definitely save save save. 

Saving for an emergency fund 

Not fun, is it? Wouldn’t you rather save for something a little more awesome? Like a holiday? But the truth is it's always handy to have a stash saved in case something goes wrong with your car.

Perhaps you could split this emergency fund into different categories so you don’t feel like you're saving is getting the raw end of the deal. When it comes to car repairs, you’ll be grateful that you did put money toward your emergency fund for any kind of unexpected expense. Start by putting $5 a week, $10 a week and slowly increase it. You’ll hardly miss it anyway. In no time you’ll have a pile of savings in your bank that you didn't have before. 

  • Saving tip 101: better to save money in a high interest savings account you hardly use so that you’re not tempted to use the money until or if you need it. Out of sight, out of mind.

After a car loan instead to buy a new set of wheels? Check out some options below! 

Car Loan Comparison Table - last updated December 04, 2020

Search promoted car loans below or do a full Mozo database search. Advertiser disclosure.

I want to borrow


  • mozo-experts-choice-2021

    4.67% p.a.

    5.22% p.a.based on $30,000
    over 5 years

    Terms from 3 to 5 years. Representative example: a 5 year $30,000 loan at 4.67% would cost $34,096.76 including fees.

  • 4.89% 8.89% p.a.

    5.44% 9.46% p.a.based on $30,000
    over 5 years

    Terms from 3 to 7 years. Representative example: a 5 year $30,000 loan at 4.89% would cost $34,276.58 including fees.

  • 4.89% p.a.

    5.53% p.a.based on $30,000
    over 5 years

    Terms from 1 to 7 years. Representative example: a 5 year $30,000 loan at 4.89% would cost $34,377.58 including fees.

  • 5.19% 18.95% p.a.

    5.46% 19.26% p.a.based on $30,000
    over 5 years

    Terms from 3 to 7 years. Representative example: a 5 year $30,000 loan at 5.19% would cost $34,320.13 including fees.

  • 5.50% p.a.

    5.85% p.a.based on $30,000
    over 5 years

    Terms from 1 to 7 years. Representative example: a 5 year $30,000 loan at 5.50% would cost $34,632.09 including fees.


^See information about the Mozo Experts Choice Car Loans Awards

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