Auto Repair and Maintenance Financing

With the way the weather and the roads in Canada can look from season to season, keeping your car in good shape can be difficult. In fact, owning a car of any kind can be pretty expensive, especially when maintenance issues arise and they usually happen at the most inconvenient time possible. If you’re currently dealing with this kind of situation, stop stressing, you have options. While you can use cash, credit cards, and other credit products to pay for many car-related costs, perhaps the pricier procedures are better financed using a car repair loan.

How Does An Auto Repair Loan Work?

Taking out a loan to finance your car repairs means that you won’t have to make one large payment to your mechanic; this is a great option for people who do not have a lot of liquid cash available for repairs that cost in the thousands. With a car repair loan, your interest rate will be more affordable than that of a credit card and you’ll have an easy-to-follow and reasonable payment plan. 

Once you’ve been approved for financing, your repair shop will be paid in full and then you’ll make affordable monthly payments until you’ve paid off the cost of the repairs.

Ways You Can Finance A Car Repair

When it comes to financing your car repair, there are multiple options you can choose from. Depending on the car repair loan you choose, it’ll have its own benefits and drawbacks. 

Personal (Installment) Car Repair Loans

When you apply for a personal car repair loan, chances are you’ll be offered two different financing options, known as “secured” and “unsecured” loans. Each option has a few benefits and drawbacks, so consider them carefully before you make a decision.

Secured Personal Loans For Car Repair

When you apply for one of these loans (or another form of secured credit), it means that you’re offering up a valuable asset, such as your home or another vehicle, to use as collateral, thereby securing your loan. 


  • Increase Approval Chances – The presence of collateral during your loan application is a good way of increasing your approval chances.
  • Lowers Rate – It also increases the possibility of getting a lower interest rate
  • Bad Credit May Be Accepted – When you add collateral to the loan it increases your credibility as a borrower. This is especially beneficial when you have bad credit or low financial strength, as lenders will see you as less risky. 


  • You Can Lose Your Asset – A drawback to offering up secured collateral is that you could potentially lose your asset if you miss too many loan payments or default on your loan agreement in some other way. In fact, when you offer an asset, your lender temporarily holds the title to it, which gives them the right to sell it to recuperate their loss in the event that they deem your debt “uncollectible”. Make sure to consider this before you apply for a secured car repair loan.

Unsecured Personal Loans For Car Repair

These types of car repair loans can be applied for without having to offer collateral of any kind, thus making them unsecured. 


  • Safer Option – Unsecured personal loans can be a much safer alternative simply because your assets won’t be at risk. If you default, you’ll likely receive a penalty charge or even legal consequences, but your assets will be safe from seizure.


  • Harder To Qualify – If you have poor credit and don’t offer any collateral, it can be much harder to qualify for the loan amount you want. 
  • Higher Rates – Moreover, without offering the lender any collateral compensation, it’s possible that your interest rate will be slightly higher. That higher rate can be very harmful to your finances and cause bad debt if you don’t factor it into your budget properly. 

Car Repair Payday Loans 

If you’re having trouble qualifying for a personal loan, you could opt for a payday loan. Payday loans are short-term loans that have extremely high rates that can range between 300% to 600%. You can only borrow up to $1,000 to $1,500, depending on the lender. These loans, like personal loans, has its pros and cons.


  • Fast Funding – Many payday lenders are able to approve and fund applicants within a couple of hours to a couple of days.
  • No Credit Check – Many payday lenders also do not require a credit check, making it a good choice for those with poor credit. 


  • Payday Loan Cycle –  One of the main dangers of a payday loan is the payday loan cycle. Individuals who are unable to repay the loan can get trapped in a payday loan cycle. 
  • High Cost – Payday loans have a very high cost of borrowing due to its short terms, high rates and fees. 
Auto Financing 101

What Does A Car Repair Loan Cover?

A car repair loan is exactly what it sounds like, an installment loan that’s designed to help you deal with your expensive car repairs. That being said, repairs aren’t the only vehicle-related costs that one of these loans can cover. You can also use a car repair loan to finance:

General Maintenance Costs

  • Oil, coolant, and other fluid changes
  • New batteries
  • Inspection costs
  • Seasonal tire changes
  • Seasonal rustproofing
  • Muffler patching and replacement
  • Timing belt/chain replacement
  • Air conditioning/heating maintenance

Cosmetic Improvements

  • New or custom paint jobs
  • Tinted windows
  • New seats
  • Rust, dent, and scratch removal
  • Custom additions (spoilers, rims, spokes, etc)

Overall Safety Improvement

  • New tires (all-season, winter, summer, etc.)
  • Head, tail, tag, and interior light repairs
  • Windshield or window replacements
  • New brake pads and discs, or other brake-related procedures
  • New airbags, seatbelts, and other safety features
  • New suspension, transmission

Accident and Damage Repairs

  • Cracked/broken windshield or other windows
  • Fender and bumper replacements
  • Front and side airbag replacement
  • General bodywork

Types Of Cars Covered Under Auto Repair Loans 

If you don’t want a repair loan for your primary car, don’t worry. You can use these loans to finance repairs for almost any other kind of commercial or recreational vehicle, such as:

  • Motorhomes, trailers, and recreational vehicles
  • Trucks and oversized vans
  • Motorcycles, dirtbikes, and other all-terrain vehicles
  • Boats and jet-skis
  • Tractors and other heavy labor vehicles
  • Skidoos and other winter vehicles
New vs. Used Cars

How To Qualify For An Auto Repair Loan?

As with any type of loan, there are a few qualifications that must be met in order to be approved for an auto repair loan. Depending on the lender you work with there might be some variation in the requirements but you should be prepared to meet the following:

  • Credit Score – Depending on the lender you work with, they may have a minimum credit score you must meet. If you have a bad credit score, you can still qualify for a car repair loan, but you may need to find a lender that accepts bad credit borrowers. 
  • Income Level – Lenders will require proof of income in order to assess whether or not you can afford to repay the loan. 
  • Debt Level – Another factor assessed to determine whether or not you can afford the loan is your debt-to-income ratio. The lower the ratio the higher your chances of qualifying and getting a lower rate. 
  • Employment Stability – Generally lenders require that you be employed for a minimum of 3 – 6 months. 
  • Bank Account – Lenders usually require you to have a bank account that has been active for at least 3 months. This is required for the funding and repayment of your loan. 

Things to Consider When Financing Your Car Repairs

Remember, as beneficial as car repair loans can be, they need to be handled responsibly if you want to avoid racking up more debt than you can handle. So, before you apply, it’s important to ask yourself questions like:

  • How much is the car itself worth? Should I take it to be evaluated before I apply?
  • How old is the car?
  • How many kilometers does it have on the odometer?
  • What is the total cost of the present repair or maintenance procedure?
  • Are these procedures going to be recurring problems?
  • Is it more logical or affordable for me to just purchase a new car?
  • Will the cost of this repair loan fit into my budget and can my income support it?

Auto Repair Loan FAQs

Can I get a car repair loan with poor credit?

Having a high credit score isn’t an absolute must when it comes to getting a loan. Finding financing for a car or car repair when your credit is less than great isn’t as hard as most people think or are led to believe. Whatever financial issues you might have when it comes to car loans and even personal loans you’ll always have at least a few different options to choose from. The main reason for this is because lenders tend to look at your financial history as a journey with many different parts, your credit score is one of those parts but it’s not the only thing that lenders look at.

Can I finance my car repair?

Yes, thankfully there are many lenders in Canada who offer loans to help cover the cost of an auto repair. A loan is often a good option for those who can’t afford to fork over a large lump sum of cash for a car repair. 

Should I use a credit card to cover my car repair? 

It can be tempting to use your credit card to pay for an emergency car repair, especially if you’re in a rush and need your car to be in working order right away. For a small repair that costs $100 or less, your credit card might be an ok option but for larger repairs that cost hundreds or thousands of dollars, using your credit card could double or triple the cost of the repair in the long run. High-interest rates, short payment cycles, and the constant threat of never-ending credit card debt are all reasons why you should not charge your vehicle repairs. Acquiring a small loan to finance a car repair, on the other hand, is a much smarter move.

Is it worth repairing my car? 

If the cost of your repair outweighs the value of your car, it may not be worth repairing your car. Instead, you may want to consider selling it and buying a new one.

Can I finance my car repair through my auto repair shop? 

Yes, however, it depends on whether or not your auto repair shop offers in-house financing. Some auto shops offer their own financing programs or partner with a loan company that will provide financing. Other times, you’ll have to seek financing from an outside lender. Whatever option you choose is up to you and the repair shop you’re working with.

We’ll Get You Back Behind The Wheel

We can work with the garage of your choice to pay off the cost of the maintenance and repairs and get you back on the road. Visit our auto maintenance loan application page and start the process today!



An appraisal involves assessing the value of a property based on current market values and is conducted by an appraiser that is typically assigned by a lender. The appraisal is then used by the lender to determine whether or not to extend a mortgage to a borrower.

Bridge Loan

A bridge loan is a type of short-term loan that may be used to “bridge” the gap between carrying a mortgage on an existing home and covering the mortgage for a new home. These are usually obtained when the closing dates of a home sale and purchase overlap, requiring the seller to continue paying the mortgage on the existing home before it closes while paying the mortgage on a new home.

Canadian Housing and Mortgage Corporation (CMHC)

A governing body in Canada that oversees and executes several federal housing projects in relation to the National Housing Act.

Cash-Back Mortgage

A cash-back mortgage allows borrowers to obtain the mortgage principal and a percentage of the loan amount in cash, which can come in handy to cover the cost of certain expenses, such as making home improvements or paying for car repairs. Rates on these types of mortgages tend to be higher compared to other home loans.

Closed Mortgage

A closed mortgage allows borrowers to prepay only a certain amount of the principal without being charged a prepayment penalty fee. Fixed-rate closed mortgage prepayment penalties are usually 3-months’ worth of interest or the interest rate differential, whichever of the two is greater.

Closing Costs

Before a real estate transaction closes, certain closing costs will need to be paid, which can include real estate commissions, lawyer fees, land transfer taxes, appraisal fees, home inspection fees, adjustments, and others.

Conditional Offer

A conditional offer is not yet final and means that there are certain conditions that must be fulfilled by the buyer, seller, or both before the sale is considered “firm.” For instance, an offer could be conditional on the home being inspected, which the buyer must be satisfied with.

Construction Mortgage

A construction mortgage allows borrowers to finance the cost of construction of a new home or major renovations.

Debt Ratio

Your debt ratio determines your ability to pay off a mortgage by measuring your debt relative to your income. Lenders look at debt ratios to assess a borrower’s ability to make mortgage payments. A high debt ratio means your debt load is too high relative to your income. Gross debt service ratio refers to your debt that does not include a mortgage payment, and total debt service ratio refers to your total debt including mortgage payments.


A deed is a document signed by the seller that transfers ownership from the seller to the buyer.

Down Payment

A down payment is the money that is put toward the purchase price of a home. The required down payment will depend on a number of things, such as the type of mortgage being taken out and the cost of the house.

Firm Offer

An offer goes “firm” after all conditions have been satisfied and signed off by all parties. A sale can also be immediately firm if no conditions are included.

Fixed-Rate Mortgage

A fixed-rate mortgage means that the interest rate does not change throughout the entire mortgage term. Even if posted interest rates go up or down during the term, your rate will be locked in and stay the same until the term ends.


Foreclosure is an unfortunate situation in which a homeowner loses possession of the title of their home as a result of mortgage payment defaults. When mortgage payments are missed, the foreclosure process may begin after a certain number of days have passed. In this case, the lender can take over the home under a “power of sale,” after which the homeowner may still have a chance to make good on their mortgage payments and bring their debt up to par. Otherwise, the lender may make efforts to sell the property to recover any money they are owed.

Gross Debt Service Ratio

A gross debt service ratio is the measure of housing-related debt relative to a borrower’s income. GDSR is a factor that lenders consider when determining whether or not to approve a mortgage application.

High-Ratio Mortgage

A high-ratio mortgage refers to a mortgage in which the principal is greater than 80% of the property’s value. That means more than 80% of the home’s value must be borrowed in order to buy a home, while the down payment is less than 20% of the property value. High-ratio mortgages require mortgage default insurance to be paid.

Home Buyers’ Plan (HBP)

The First-Time Home Buyers’ Plan (HBP) is a government incentive program that allows first-time homebuyers to withdraw up to $25,000 from their Registered Retirement Savings Plan (RRSP) – or $50,000 in total for first-time home buyers and their partner – to buy or build a home. The full amount withdrawn must be repaid within 15 years.

Home Equity

The equity in a home represents the value of the property, less total outstanding debt, that the owner actually owns outright. It is calculated by subtracting the total mortgage loan amount still owed by the property’s value.

Home Equity Line of Credit (HELOC)

Using the equity in your home, you can secure a line of credit that uses the equity as collateral. The credit limit is usually equivalent to a particular percentage of your home’s value and there is a set date when the loan must be repaid. If you default on this kind of loan, the lender can repossess your home and sell it to cover the owed debt. Since there is a high risk with this type of financing, it is typically used to finance big purchases such as home improvements, education, or medical expenses.

Home Inspection

Many conditions can be inserted into a purchase agreement, including a home inspection. The home inspection allows buyers some time to have the property assessed by a professional to uncover any potential issues with the home before the buyer is obligated to complete the purchase.


Interest is added to the principal amount of the mortgage and is paid to the lender in exchange for access to the funds needed to complete a real estate purchase. Interest is charged from the moment the money is received to the moment the term expires.

Land Transfer Tax

Land transfer taxes are charged by the province in which the property is being purchased, as well as in certain municipalities. It is a type of tax that is based on the purchase price of the property, though these taxes vary by province. First-time homebuyers are sometimes exempt from paying the entire land transfer tax amount and may be eligible for a rebate.

Maturity Date

The maturity date is the date when the mortgage term ends. It is at this point that the mortgage must either be paid in full, refinanced, or renewed for a new term.


A mortgage is a loan that is provided by a lender to help a homebuyer complete a home purchase. Lenders provide a certain amount of money required to cover the cost of a home’s purchase price while charging interest on the principal amount. The loan is collateralized by the property itself. The mortgage must be repaid according to the terms of the contract. If the loan amount cannot be repaid according to the terms, the lender has the right to repossess the property and sell it to recoup any losses.

Mortgage Broker

A mortgage broker is a professional who works on behalf of the borrower and finds the best mortgage product and lender among their network of lenders.

Mortgage Default Insurance

Mortgage default insurance is designed to protect the lenders when a borrower is unable or unwilling to repay their mortgage. This is applicable to high-ratio mortgages where the down payment amount is less than 20% of the purchase price of the property and does not apply to conventional mortgages. Borrowers are responsible for this payment.

Mortgage Discharge

A mortgage discharge is issued by the lender when the mortgage is paid off in full by the borrower. When the mortgage is fully repaid, it is discharged from the title to the property and certifies that the property is completely free from the mortgage debt

Mortgage Life Insurance

Mortgage life insurance is an optional policy that borrowers may take out. It is designed to reduce or pay off the mortgage amount (up to a certain amount) in the event of the borrower’s death.

Mortgage Payment

A mortgage payment is the regular payment borrowers are required to make to pay off their home loan. These payments can be made monthly, semi-monthly, biweekly, or weekly, and include both principal and interest.

Mortgage Pre-Approval

A mortgage pre-approval involves having your credit and finances checked out before you formally apply for a mortgage once you agree to purchase a particular home. It allows you to find out how much can be afforded, how much the lender is willing to lend, and the interest rate that may be charged. Pre-approvals expire within 90 to 120 days after they are issued and are not a guarantee of final mortgage approval.

Mortgage Principal

The mortgage principal represents the amount of money borrowed from a lender and does not include the interest portion.

Mortgage Statement

Lenders typically submit a mortgage statement to borrowers on a yearly basis that details the status of the mortgage, including how much has been paid and the principal on the mortgage that still remains.


The mortgagee is a mortgage lender.


The mortgagor is the borrower.

Multiple Listing Service (MLS)

The Multiple Listing Service (MLS) is a database of listings where real estate professionals market properties they have for sale and search for properties for sale for their clients.


The offer represents the purchase agreement that the buyer submits to the seller and that the seller can either accept, reject, or negotiate with the buyer. The offer includes the offer price, deposit amount, closing date, conditions, and other items pertinent to the transaction.

Open Mortgage

An open mortgage allows borrowers to repay their loan amount in part or in full without incurring any prepayment penalty fees. Open mortgages tend to have higher interest rates compared to closed mortgages but are more flexible. 

Posted Rate

The posted rate is the lender’s benchmark advertised interest rate for mortgage products offered. These are not necessarily set in stone, but may be negotiated with the lender.


Prepayment is made when some or all of the loan amount is paid off before the end of the mortgage term. Most open mortgages can be paid off early without any prepayment penalty charges, but prepaying a closed mortgage typically comes with a prepayment charge. However, most closed mortgages allow an annual prepayment of anywhere between 10% to 20% without any penalty.

Prepayment Charge

When all or part of a closed mortgage is paid off before the end of the mortgage term, a prepayment charge may have to be paid to the lender.

Prime Rate

The prime rate advertised by a lender is typically based on the Bank of Canada’s interest rate that is set each night, which may change at any time.

Property Insurance

Property insurance must be paid on a home throughout the mortgage term. Lenders require a policy to be held on a property before they agree to extend a mortgage, and the lender must be named on the policy. This type of insurance covers the cost of any repair or replacement as a result of damage to the home from fire or other disasters.

Property Tax

Property taxes are paid by homeowners to their respective municipalities to cover the cost of things such as police, garbage collection, policing, schools, and fire protection. The property tax amount paid is based on the property’s value and the rate charged by the municipality.

Qualifying Rate

A qualifying rate is the interest rate that a lender uses to assess a borrower’s eligibility for a mortgage and to calculate your debt-service ratio.


When the term of a mortgage expires, another term may be negotiated with the lender. If the mortgage is not renewed, it must be paid off in full.

Reverse Mortgage

Homeowners over the age of 55 can use a reverse mortgage to borrow as much as 50% of the home’s value to be used to pay for other expenses. Payments are not made on a reverse mortgage, but interest can accrue on the loan amount until the property is sold or until the homeowner passes away.

Second Mortgage

A second mortgage may be taken out on a home that already has a mortgage on it. The funds accessed through a second mortgage from the home’s growing equity may be used to cover other expenses, such as home renovations, but they carry more risk than first mortgages.

Statement of Adjustments

The statement of adjustments outlines the purchase price, deposit, and any financial adjustments that are required for taxes, utilities, or condo fees that have been prepaid by the seller and payable by the buyer to compensate the seller for fees already covered on the home.


A survey is a plan of the property’s lot that shows the lot size and where the property boundaries and building structures lie. It will also show where any easements, right-of-ways, or overhanging structures from adjacent properties that could impact the value of the home.


The mortgage term is the period of time that you are committed to your mortgage with your lender, including the interest rate. When the term expires, the mortgage either needs to be paid off in full, refinanced, or renewed, either with the same lender or a new one. The average term is 5 years, though it can range anywhere from 1 to 10 years.


Title is the ownership provided to a homeowner when a property is purchased. A clear title is required by lenders before a mortgage is extended. If there are any issues with the property’s title, they must be resolved before the transaction closes.

Title Insurance

Title insurance is meant to protect lenders and buyers from issues on the title that are discovered after the transaction closes. Title issues can include title fraud, encroachments, municipal work orders, or zoning violations. If title insurance is purchased, it will be added to the closing costs.

Total Debt Service Ratio

The total debt service ratio refers to the percentage of gross annual income needed to cover all debts in addition to the mortgage payments (including principal, interest, taxes, utilities, and more).

Variable-Rate Mortgage

With a variable-rate mortgage, the interest rate will fluctuate based on a financial index. Monthly payments could remain the same, but the amount paid toward interest versus principal could change. If rates increase, more money is paid toward interest, but if rates decrease, more money goes toward the principal.

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