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No matter what steps you take to protect your vehicle, you will most likely end up dealing with at least a few mechanical problems over the years. Most of those repairs should be relatively affordable, but there may come a point when you need to consider alternative financing options. Here is a quick look at a few different ways you can pay for your future car repairs.
This type of insurance covers car repairs that aren’t related to an accident. Much like health insurance, you will have to pay a deductible before the coverage becomes active. Once you have paid the deductible, your MBI should cover most or all of your repairs. This is an excellent option if your current insurance provider already offers mechanical breakdown insurance. Your current provider might even give you a discount if you bundle MBI with your other policies.
When you first purchase a car or truck, you should try to put a few dollars a month into a separate savings account. As the vehicle ages and breakdowns become more likely, your emergency fund will continue to grow. Even if you have breakdown insurance, the emergency fund could help you cover repair costs until the claims adjuster approves the insurance payout. The emergency fund can also be used to cover basic maintenance if your finances are tight.
If your vehicle is relatively new, then it should be covered by a warranty. In addition to the manufacturer’s warranty, your vehicle might also fall under a dealership warranty. These warranties usually cover “wear items” such as brake pads, tires, and windshield wipers. Those who have a warranty should make sure that they adhere to all of the rules set forth in the contract. Failing to properly maintain your vehicle could void your warranty.
Having a good credit card could help you avoid a major catastrophe when your vehicle becomes damaged. That being said, credit cards shouldn’t be used flippantly. Even if your credit card has great interest rates, you should only use it for smaller mechanical issues like brake repair services. Paying for expensive repairs with your credit card could end up costing you thousands if you aren’t able to pay off the balance right away.
If the repairs are overwhelmingly expensive, then you might want to consider selling the vehicle entirely. Once you start dealing with broken transmissions and blown headers, buying a new vehicle could actually be a better financial option.