I Have a Big Car Repair Bill Coming but I'll Save Money Using This Financing Trick

The silver lining on a very dark cloud.

It's weird how terrifying one tiny little light can be. But when that little light happens to be illuminating the words "Check Engine," it brings with it an immediate, soul-crushing sense of dread.

The only thing worse? The "We need to talk" voicemail from your mechanic the next day. As any rom-com watcher knows, nothing good ever comes from those conversations.

And I should know. I just had that conversation last week. Now I'm looking down the barrel of a high-four-figure car repair.

I'm lucky enough to have a modest emergency fund. Even so, this repair is pricey enough that it would take a large chunk out of my savings account. To avoid draining my fund in the middle of record inflation, I've been looking at other ways to finance the king's ransom in my future.

With a bit of research, I've settled on a solution that will not only let me spread out payments over the next 18 months, but actually help me get back about 9% of my costs.

0% interest financing

My very first thought when I got the estimate for my repair was a personal loan. This would let me break the payments down over a couple years so that I didn't hurt my monthly budget too badly or drain my savings.

Then I started looking at APRs. Even with great credit, personal loans can have fairly high interest rates. Was it worth hundreds of dollars in interest fees to keep my emergency fund intact?

When I started really crunching the numbers, I realized that I didn't really need the three to five years a personal loan would offer. In reality, I could probably manage to pay off the repair sooner -- without killing my budget -- if I was willing to make a few small cuts here and there.

This realization opened up a new option: 0% intro APR credit cards. Cards with intro 0% APR deals don't charge any interest on purchases during the introductory period. You still need to make your minimum monthly payments, but you don't accrue interest fees.

After a little searching, I settled on a card with an intro offer for 0% interest on purchases for the first 18 months. While the monthly payments will be higher than I'd pay with a personal loan, it will all go towards paying off my balance instead of wasting money on interest fees.

The main downside to using an intro APR credit card offer to finance a large purchase is that intro offers are, by nature, temporary. Once the introductory period ends, any remaining balance will start accruing interest at the go-to APR -- which is in the double digits. This means I'll need to make sure to pay off my entire balance before the intro period ends so I can avoid accruing interest on what remains.

Rewards and a sign-up bonus

Using a credit card to finance my repair is also going to have another benefit: rewards. The card I chose earns cash back rewards on every purchase. While auto repairs don't fall into any of its bonus categories, I'll still get 1% cash back. For such a large purchase, that works out to a decent savings.

But there's more. In addition to the intro APR offer, the card also comes with a sign-up bonus for new cardholders. Given the cost of my car repair, I'll easily meet the spending requirement in that transaction alone, netting me another lump sum of cash back without any extra effort.

To make matters even more rewarding, the card I chose happens to be one that my partner already owns. This meant they could send me a referral link. As a thank-you for referring me, the issuer is going to give my partner a referral bonus, netting us even more cash back.

All in all, we'll wind up with hundreds in purchase rewards and bonuses for spending money that we'd have to spend anyway. While it's certainly not going to be anywhere close to what we're plunking down for the repair, it does feel like a pretty significant discount.

Don't defer your interest

One thing I really want to make clear is that I'll be using a regular 0% intro APR card from a major issuer, not a card from my mechanic with "special financing" or another type of deferred interest offer.

What's the difference? Regular intro APR cards don't accrue any interest during your introductory period. If you still have a balance when the intro period ends, you'll only accrue interest on your remaining balance.

Deferred interest offers, on the other hand, still accrue interest -- they just don't charge you for it right away. If you pay off the full balance before the promotional period ends, you won't ever be charged that interest. However, if you have any balance at all remaining after the promotion ends, you'll be charged interest on the entire amount.

When used properly, intro APR offers can be a fantastic financing tool. Just be sure to read the fine print. Avoid deferred interest offers unless you're absolutely, positively sure you can pay off the full balance before the promotional period ends.