Paying for auto repairs can be painful, especially if the repair bill is high and you don't have the cash or your credit cards are maxed out. Some locally-owned neighborhood auto repair shops may extend you credit and allow you to pay off your repair bill over time. But most will not for fear they will never receive what you owe them. Consequently, if you drive an older car or a truck, sooner or later you will have to pay for repair bills.
Most repair facilities expect payment in full when you pick up a vehicle after it has been serviced or repaired. Paying with cash is always appreciated (assuming you have the cash). In some cases paying with cash may allow you to negotiate a discount of up to 3 percent or more off your bill. Merchants have to pay credit card companies a fee for credit card transactions, so paying cash elimintes this expense and increases their profit margin. Small, privately-owned businesses also like to be paid in cash because (1) they get their money now, and (2) it leaves no paper trail for the tax man (or their spouse if their spouse keeps the books).
In lieu of cash, most repair facilities will accept a credit card (Visa, Master Card, etc.), or a personal check as long as the check is drawn on a local bank. For expensive repair bills over a certain dollar amount (say $500 to $1000 or more), the repair facility may require you to have your check "pre-approved" and/or to sign an agreement that makes you liable for collection fees and penalties if your check bounces.
But how do you pay your auto repair bill if you don't have the cash, or your credit cards are maxed out, or your checking account balance is embarrassing low?
Financing Auto Repairs
Some repair facilities work with banks or finance corporations to provide financing for major auto repairs such as replacing an engine or transmission. Payment terms may range from six months up to three years depending on your credit rating. Interest rates though a consumer finance corporation will usually be much higher than though a bank, but finance corporations will often accept customers that might not qualify for a bank loan.
One relatively painless way to finance a major repair such as an engine or transmission is to pay for it via a home equity loan. If you have a home equity line of credit, all you have to do is write a check on your line of credit. The interest rate will be much less than that charged by any credit card, finance company or consumer bank loan (currently 6 to 8 percent for a home equity loan versus 12 to 24 percent or more charged by most credit card companies and commercial lenders). What's more, you typically have up to 5 years or more to pay back a home equity loan, and you can pay interest only if you are really in a pinch. If you are planning on selling your house in the near future, you can pay off the balance on your home equity loan from the proceeds of your home (assuming you have enough equity to do so).
Another source of funds is relatives (parents, grandparents, uncles, aunts, etc.). If they have money sitting in a savings account, money market account or certificate of deposit that is earning only a few percent interest, offer to pay them double the interest they are getting now for a car repair loan. It will solve your problem, save you interest compared to any other means of financing, and if you are lucky, they might even feel sorry for you and forgive the loan or just give you the money.
Avoid taking out a payday loan, or getting a "juice loan" from somebody on the street because these people charge outrageous interest rates, and may break your legs or worse if you fail to make a payment on time!
Be creative. In some cases, a repair facility may be willing to swap services for a repair bill. For example, if the shop needs painting, you might be able to pay your repair bill by agreeing to paint the shop or to paint their outdoor signage. Or, if the shop owner has small kids, you might offer to trade babysitting to pay for your repair bill. Daycare in many large cities can cost up to $250 a week or more, which can offset a repair bill fairly quickly. Know how to make pizza? Maybe you could deliver some homemade pizzas to the shop several days a week to pay for your auto repair bill.
What Happens If You Don't Pay Your Repair Bill?
You walk. Most repair facilities will NOT release your vehicle if you are unable to pay. They may give you some time to come up with the money (like giving you until your next payday to pay the bill, or giving you a few days to call your Uncle Louie to see if you can borrow some money from him). But for every day that you delay paying the bill, the shop may add on a "storage fee" of $10 to $30 or more a day.
If you have not come up with the money within 30 days, most shops will go to Small Claims Court and have a Mechanic's Lien placed on the title to your vehicle. This means you can't sell or trade your vehicle until the bill has been paid in full and the lien has been released.
If the repair bill is equal to or greater than the wholesale valve of the vehicle, they shop may attempt to sell your vehicle in an attempt to recover their costs in fixing it. This often happens when the vehicle owner simply abandons the vehicle after being unable to pay the repair bill.
Other Things To Keep In Mind
You might think that driving a new car is the only way to avoid repair bills. Most new cars and trucks today come with a factory bumper-to-bumper warranty that covers almost everything for 3 years or 36,000 miles, or in some cases 4 years or 50,000 miles from the date of manufacture (not the date of purchase). Other parts such as the engine and transmission (powertrain) may be covered by an extended warranty either from the car dealer or from an aftermarket extended warranty provider. You can also purchase special extended warranties to cover most major items, too. Just remember that warranties always have fine print and lots of clauses, so be sure to read what is covered and what is not (and under what circumstances). Also be aware of the fact that supplemental warranties usually have an out-of-pocket deductible, and that some aftermarket warranty companies don't have a good track record for paying their claims promptly. Others just go out of business and leave their customers with a worthless warranty.
If you anticipate your vehicle will need major repairs in the near future, it might be less expensive to sell or trade it for another vehicle than to spend a lot on repairs. If the cost of the repairs exceeds the wholesale or trade-in value of the vehicle, the repairs may not be worth the expense unless you plan to keep the vehicle at least several more years.
Some churches and charitable organizations offer discounted or even free auto repairs for people who otherwise might not be able to afford such repairs. But don't ask a repair shop to fix your car for free. They have employees and expenses to pay, too, and if they give away their business they will soon be out of business.
If a repair is not a highly technical or complicated repair that requires a lot of know-how or special tools, consider doing the repair work yourself to save money. Or, hire a relative, friend or neighbor who has some auto repair experience to do the repairs for you. The articles on this website can provide most of the how-to help that may be needed to fix many common problems.