>Here’s Why You Should NOT Use Payday Loans For Car Repairs
Here’s Why You Should NOT Use Payday Loans For Car Repairs
1 in 5 UK drivers admit to driving unsafe cars because they can’t afford the repair bill. A large proportion of people turn to payday loans to cover the cost. However, this may not be the best solution.
Payday loans VS Interest free finance
10% of payday loans are used for car or vehicle expenses but payday loans often have large interest rates. Typical interest rates work out to be 1,300% APR. One company we found offering payday loans for car repairs, estimated a 6-month £2,000 loan would cost £ 3273.94 including interest.
Companies offering payday loans tend to pray on those with poorer credit scores. ‘Pay day loans for bad credit’ is a phrase that appears frequently when searching online. This may seem appealing if you have a low credit score but you’re likely to be charged a much higher interest rate as a result.
Finder.com reported that the average payday loan user is younger, between the ages of 25 and 30; single; in rented accommodation and on a low income, with a household income of less than £1,500 per month. 61% of these users admitted to feeling less confident about managing money. Payday loans may seem like a quick solution to your car repair problems but could leave you with large amounts of interest to pay and your credit score negatively impacted (if you’re unable to make the repayments).
Our interest free, buy-now-pay-later loans for car repairs keep things simple. They have, of course, 0% APR meaning what you borrow is exactly what you pay. The cost to the lender is covered by the garage in the form of a small percentage charge, so there is no need to worry about finding extra cash to cover the cost of the interest.
Bumper’s use of soft credit checks and risk management systems uses artificial intelligence to make lending decisions based on previous loans meaning we can lend responsibly and not push customers into debt. It also ensures we can lend to many people. Our average accept rate is 95%.
Interest free loans can be accessed through participating garages. You can find local garages using your postcode on our ‘find a garage’ tool here.