The Problems with Using a Credit Card to Pay for Car Repairs
Cars never break down when you have loads of money flowing through your hands and bank account. In fact, vehicles seem to break down when people are most strapped for cash. If your car is in need of costly repairs and your funds are low—don't reach for your credit card. Taking out a loan to pay for your car's needed repairs is often a wiser option, in both the short and long term.
Interest
When you use your credit card, you will be charged interest. Unless you're expecting a large sum of money soon, if the balance on the credit card is not paid off by the next billing cycle, the account will incur additional interest. The scary thing about credit cards is that you can pay interest on a single charge for months or years. With a loan, you pay a set amount of interest for a set period. Provided you make the payments as agreed, you don't have to worry about additional interest.
Credit Rating
If the amount of the car repair is close to the total limit on your credit card, your credit score could tank, as credit card utilization is a credit scoring factor. If you aren't able to pay off the balance quickly, your score can take a hit for some time. Not all car repair loans are reported to the credit bureaus. However, for those loans that are, provided you pay as agreed, you don't have to worry about your credit utilization score lowering.
Unexpected Emergencies
Credit cards have some risks, but they can also come in handy in the event of an emergency, such as if you need to travel out of town for a family emergency. If you use your credit card to cover the cost of the car repairs, you won't be able to rely on your credit card. A car repair loan allows you to get the repairs you need while keeping your credit card clear for something else.
Merchant Surcharges
When you use a credit card, the merchant you're performing the transaction with is charged a percentage of the sale. Some merchants pay the cost on their own, and then there are some that will recoup the cost in the form of a surcharge to the customers. If you visit an auto repair shop that exercises this practice and use a credit card to pay, you will be forced to pay above and beyond the cost of the repair. With a car repair loan, you can pay cash and avoid additional costs altogether.
If your car is in need of repairs, protect your finances with a car repair car loan. With flexible credit, loan amounts, and repayment options, you're sure to find a loan that is tailored to fit your needs. Contact a business like American Cash Advance and Title Loan for more information or assistance.