Owning a car comes with plenty of expenses. While you may be used to paying for recurring costs like gas or car insurance, an unexpected repair can put a huge dent in your budget. In fact, the average car repair can cost anywhere from $195 to $1,986, according to FIXD, an online resource that provides drivers with information to help maintain and fix their vehicles. 

Such a large expense could cause financial issues for many car owners. If your vehicle needs repairs, taking out a personal loan could help spread out the cost of a major bill. But before you start submitting loan applications, consider how auto repair loans work and what to know before choosing one.

Here’s everything you need to know about auto repair loans:

An auto repair loan is a personal loan that lets you borrow a lump sum of money to use for your own financial needs — including fixing a vehicle. 

Whether you’re in a car accident that isn’t fully covered by auto insurance or you need some work done in order to pass your annual inspection, using a personal loan for car expenses gives you flexibility to use the funds as you see fit.

The downside is that you’ll need a good credit score to qualify for the best rates. You’ll also be adding another bill to your monthly budget, which could cause some financial distress or take away from other financial goals.

If your credit score is less than perfect, applying with a cosigner (or co-borrower) with good credit can increase your chances of getting approved. Even if you’re able to qualify, applying with a creditworthy co-applicant might help you get a better rate than you would on your own. Just be aware that if you’re unable to keep up with payments, your cosigner will be on the hook for paying off your loan.

Another option if you don’t have good credit: applying for a secured personal loan that’s backed by collateral, such as your wheels, bank savings or another asset. The downside of secured auto repair loans is that you could forfeit the collateral if you default on the debt.

As an installment loan, a personal loan used for car repairs comes with a fixed payment each month for a set period — typically between one to seven years. For borrowers with good credit, interest rates are typically lower compared to credit cards, and you know exactly how long it will take to pay off your balance in full.

Additionally, unlike an auto loan used to purchase a vehicle, personal loans are usually unsecured, meaning you’re not putting any of your assets at risk.

The amount you can borrow depends on your income and other monthly debt payments. This is called your debt-to-income ratio (DTI). Most lenders allow a maximum DTI of 35% to 40%, meaning up to 40% of your monthly, pre-tax income can be used for paying off debt. If you have a high DTI, you may only be eligible for small personal loans.

Every lender has its own approval requirements for a personal loan. Here are typical requirements to consider: 

Many financial institutions offer personal loans that can be used for auto repairs. Most banks and credit unions offer these products.

Related: Learn more about getting a personal loan on Credible.com

If you’re in the market for an auto repair loan, consider the following Credible partner lenders: 

1. Achieve

2. Avant

3. Axos

4. Best Egg

5. Discover

6. LendingClub

7. LendingPoint

8. LightStream

9. OneMain Financial

10. PenFed Credit Union

11. Prosper

12. SoFi

13. Upgrade

14. Upstart

If you’re ready to apply for an auto repair loan, follow these five steps: 

1. Decide how much money to borrow: Consider both how much you need, as well as how much you can afford to repay each month. Make sure to only borrow what you need to avoid unnecessary debt.
2. Shop around to compare multiple lenders: When shopping around for an auto repair loan, it’s a good idea to compare as many lenders as possible and prioritize those that offer prequalification. This will help you get the best interest rate and lowest fees. Also consider the loan term, which impacts your monthly payment and how much interest you’ll pay over the life of your loan.
3. Choose your loan option: Carefully read all the terms and conditions of each loan offer to choose the best option for your unique financial situation. 
4. Submit an application: After you’ve found the best loan option for your needs, it’s time  to submit a formal application. Be prepared to provide basic personal information such as your name and address, as well as financial documents such as recent pay stubs and tax returns. Much of what you supply here will be to verify what you may have mentioned during the prequalification process. Keep in mind that when formally applying (unlike while prequalifying), you’ll be subject to a hard credit check that can temporarily impact your credit.
5. Receive the loan funds: Each lender’s funding time varies, but you’ll likely have the money deposited into your account within a few business days after your application is approved. Many online lenders are able to release loan funds within a day or two of approval, while traditional lenders like banks and credit unions may take up to a week.

Unsecured auto repair loans come with several benefits, including:

Your credit score directly impacts your eligibility for a loan, as well as what  interest rate you qualify for. The higher your interest rate, the more your monthly payment will be, and the more you’ll pay for the loan over time.

But you still may be able to qualify even if your credit score is below average. If you have trouble getting approved, you may be able to secure the loan with some type of personal asset, or get a family member or close friend to serve as a cosigner or co-borrower (if you share ownership of the car in question).

In addition to auto repair loans, here  are some other options to consider to help fix your vehicle:

Related: Learn more about getting a personal loan on Credible.com