November 23, 2023

How to budget for and handle expensive car repairs

If you’re facing car repair bills, what are the best and worst ways to pay them? We explore your best options here.

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How to budget for and handle expensive car repairs

A man who needs car repairs calls for help

Like everything else, the cost of car repairs has shot up. CTV News reports the cost of dealership repairs went up 10% in a year, and what you’d pay an independent garage went up over 6%. Now, minor scratches are becoming major pains for many Canadians, and extensive (usually necessary) car repairs are crippling.

Budgeting for car repairs

According to Canada Drives, the average cost of regular car repairs is about $1,500 a year. Autohut Collision Centre in Mississauga, ON, notes that the average conservatively-estimated cost of repairs after minor accident in Ontario can run up to $800. A moderate repair can get close to $3,000 and medium to major repairs will be what they’ll be.

The best way to budget both for regular and unexpected repairs is to save for them separately. Add accident repairs and deductible payments as an element of your emergency fund that you contribute to every month. At the same time, start a separate savings plan to slowly amass $1,500 to cover all of next year’s regular repairs.

What if you don’t think you can afford your car repairs?

Step number 1 is to get another quote. Car repair is both a competitive business and a relationship business, so many will negotiate on the cost of your first car repair so you’re more likely to become a returning customer in the future.

You may be limited in how many quotes you can get by how quickly you need your car back, but try to get at least three. 

Is your car causing too much debt?

Car repairs are among the worst reasons to incur debt.

In a perfect world, you’d pay for your car repairs in cash.

Your car loses value every day you own it and every kilometre you drive it. The amount you spend to keep it on the road — from gas, to insurance, to wiper fluid — is also going up. You should do everything you can to avoid adding to this lopsided equation by paying more than just the minimum interest when you get your car repaired.

So, look hard for ways to make some extra money quickly. Can you sell something in your home that you’re not using anymore? Can you pick up an extra shift or two at work? Can you cut an immediate expense, like a monthly subscription (even if it’s only for a few months)? Is there anything you pay for as part of your daily routine that you can do yourself? Try what you can, because even paying part of the car repair costs in cash is better than taking it all on as debt. 

If you have to borrow money for car repairs, do it smartly.

Only charge your credit card if you can afford to pay it off in 1-3 months. If you don’t think you can pay if all off in 90 days, don’t use a credit card. The high interest rate and short payment cycle is an all-but-sure-fire way to wildly overpay for your car repairs. Instead, you’d be wise to look for a loan to cover the costs — especially given the range of options you have:

Secured vs. unsecured:

A secured loan requires you to put up collateral (in this case, it would most likely be your car), but the interest rate is lower. An unsecured loan requires no collateral but will come with a higher interest rate.

Line of credit vs. bank loan:

You’d get both from the bank, and which one will depend on the kind of repairs you’re looking at. If you need a lump-sum amount, a loan is your best bet. If you’re going to be paying for some servicing here and there, the revolving nature of a line of credit makes sense because you can borrow and pay back at will.

Payday loans vs. auto title loans:

You’ll see these options online as you do your searching. Avoid them both like the plague. They’re predatory and can carry interest rates in the 300 to 400% range

Borrowing from friends vs. borrowing from family: 

If given the option, family is usually a better choice because blood will always be thicker than money and you’ll probably get far more flexible terms.

How to avoid car repairs

Treat your car well and it will return the favour.

Obviously, unexpected damage caused by a collision, bad weather, flying debris or vandalism is out of your control, but so much of what you’ll spend on car repairs is damage caused by owner negligence. This is because of all the moving parts in the car and how easy it is for them to get damaged. For example:

  • Are you a careful, conscientious driver? You should be if you want to extend the life of your car and avoid repairs. Frequent starts and stops, gunning the engine at green lights and speeding regularly will sap your engine and bald your tires.

  • Do you change your oil regularly? If not, your engine will need to be repaired sooner.

  • Do you keep your washer fluid topped up? If you run out at the wrong time, you could subject your wipers to damage on icy days.

  • Do you let your kids mess around with the window controls? It won’t take long for one of them to break.

  • Do you protect your car from rust? If you live in an urban centre like Toronto or Montreal with a lot of chemicals in the air, or you live on the coast with a lot of salt in the air, you could be seeing the brown spots sooner than you’d like.

  • Do you blast the tunes? Depending on your taste in music, a blown speaker is a real possibility.

  • Do you run on empty more than you should? This taxes every system in your car.

  • And speaking of tires, do you have a set of winter tires? In addition to keeping you safe, it extends the lives of all eight of your tires. 

Although consistent TLC can only help preserve your car’s life, you don’t have to go overboard caring for your car to keep its operating costs down. Simply committing to a basic standard of care will keep so much more money in your pocket where it belongs.

A final piece of advice about car repairs

Do your research before visiting a garage, both on the kind of car you drive, what repairs cost and what parts can be replaced by generic parts versus manufacturer’s parts as the costs can fluctuate greatly. If a mechanic thinks you know what you’re talking about, they’re far less likely to over-charge you for anything. And you’ll likely be in a better position to cover your car repair costs without incurring debt. 

Do you have more questions?

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November 23, 2023

How to budget for and handle expensive car repairs

If you’re facing car repair bills, what are the best and worst ways to pay them? We explore your best options here.

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