Getting in an automobile accident can be expensive — even if you’re not at fault.
Car accident loans could be an option to cover costs in this case because even though you might be reimbursed ultimately, many initial expenses such as car rentals, doctors visits, and repairs come out of your pocket. You also have to consider the cost of missing work to attend various appointments.
If you don’t have the money to cover these immediate expenses, you could find yourself in a tough situation. Here are some ways to bridge the gap between when the accident occurs and when your insurance settlement money comes through.
1. Borrow from friends and family
If you have family or friends who could lend you money, you might consider setting up a payment plan with them. Borrowing money from people you know can be awkward, but there are strategies that can help you avoid drama.
Some people tap friends and family by setting up a crowdfunding campaign for their medical bills. Check out tips on how to create a successful crowdfunding campaign.
2. Use a low-interest credit card
You might consider opening a low-interest credit card and using it to cover accident-related expenses while waiting for your settlement. If you open a card with a low introductory rate, such as a 0% APR during a promotion period, you could charge all your expenses to this card and pay it off with your settlement money.
However, be careful of how long it might take for your settlement to come through. If the introductory rate expires while you’re waiting for your check, you could be in a doubly stressful situation.
3. Consider a personal loan
A personal loan might offer another solution for your accident-related expenses. Getting a personal loan to cover your accident costs is different from taking out car accident loans or insurance settlement loans.
A personal loan is a general loan that provides funds you can use for almost anything.
If you get approved for a low interest rate and choose a multiyear term, you’ll have less stress about how long the accident claim might take because you won’t have to worry about the interest rate going up like you would with a credit card promotion. You do, however, have to make monthly payments.
This option could be useful if you have good credit and can afford to make monthly loan payments from the time you sign for the loan to when your insurance check comes through.
4. Try to avoid car accident loans
You might see advertisements for car accident cash advances or insurance settlement loans, which use your upcoming settlement as security on the amount you borrow. The lenders know you expect to receive a lump sum, and they’re willing to lend you money based on the estimated settlement amount.
This option is available if you have bad credit and don’t qualify for a low-interest credit card or a personal loan. You also don’t have to make monthly payments, so if your budget is tight, it won’t be impacted.
But this option is very expensive because the lender will charge a fee, which can be hard to find without going through the application process. Many small, not necessarily reputable lenders offer such loans. Some lenders that offer car accident loans aren’t upfront about interest rates and fees.
In general, you’re better off avoiding this product and trying to make the first three options work.
Keep detailed records
It’s of critical importance to develop a system for keeping track of all your expenses related to the accident. Your insurance adjuster will want to know what you paid for and why as they go through the process of adjusting your claim.
A simple way to monitor your accident-related expenses is to list them on a spreadsheet — and don’t forget to save all the receipts in a handy place, including those related to your health expenses. Be sure to take photographs of any damage to your vehicle and property.
You also should keep up-to-date notes about your physical condition. It can be helpful to keep a journal of injury symptoms as well as have written correspondence with your health care providers that you can give the insurance adjuster for reference.
Create an emergency fund for the future
There are ways to find money after an accident when you need it, but it’s best to start saving toward an emergency fund so you have a financial cushion if disaster should strike. Once you get through these tough times and can take a breather, start thinking about how to create a healthy emergency fund for future expenses.
You will want to do two important things:
- Determine how much money should be in your emergency fund. The amount will depend on many factors, such as whether you rent or own a home, what your monthly expenses look like, and how worried you are about long-term issues that could prevent you from working.
- Pick a suitable process for saving money. There are many different savings plans, so find the one that’s right for you and commit to setting aside money consistently.
The most important thing to focus on after an accident is getting yourself back to good health. The stress of wondering how you’ll afford all the costs associated with the accident can stall your recovery. Find a solution that works for you and helps alleviate that stress so you can let your body heal.
Interested in a personal loan?Here are the top personal loan lenders of 2018!
|Lender||APR Range||Loan Amount|
|1 Includes AutoPay discount. Important Disclosures for SoFi.
2 Includes AutoPay discount. Important Disclosures for Payoff.
3 Important Disclosures for FreedomPlus.
4 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
5 Important Disclosures for LendingPoint.
6 Important Disclosures for LendingClub.
All loans made by WebBank, Member FDIC. Your actual rate depends upon credit score, loan amount, loan term, and credit usage & history. The APR ranges from 6.16% to 35.89%. For example, you could receive a loan of $6,000 with an interest rate of 7.99% and a 5.00% origination fee of $300 for an APR of 11.51%. In this example, you will receive $5,700 and will make 36 monthly payments of $187.99. The total amount repayable will be $6,767.64. Your APR will be determined based on your credit at time of application. The origination fee ranges from 1% to 6% and the average origination fee is 5.49% as of Q1 2017. There is no down payment and there is never a prepayment penalty. Closing of your loan is contingent upon your agreement of all the required agreements and disclosures on the www.lendingclub.com website. All loans via LendingClub have a minimum repayment term of 36 months or longer.
7 Important Disclosures for Earnest.
8 Important Disclosures for Avant.
* The actual rate and loan amount that a customer qualifies for may vary based on credit determination and other factors. Funds are generally deposited via ACH for delivery next business day if approved by 4:30pm CT Monday-Friday. Avant branded credit products are issued by WebBank, member FDIC.
** Example: A $5,700 loan with an administration fee of 4.75% and an amount financed of $5,429.25, repayable in 36 monthly installments, would have an APR of 29.95% and monthly payments of $230.33
* Important Disclosures for Upgrade Bank.
Upgrade Bank Disclosures
** Accept your loan offer and your funds will be sent to your bank via ACH within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes this transaction. From the time of approval, funds should be available within four (4) business days.
|7.73% – 29.99%||$1,000 - $50,000||Visit Upstart|
|6.26% – 14.87%1||$5,000 - $100,000||Visit SoFi|
|6.99% – 35.97%*||$1,000 - $50,000||Visit Upgrade|
|8.00% – 25.00%2||$5,000 - $35,000||Visit Payoff|
|4.99% – 29.99%3||$10,000 - $35,000||Visit FreedomPlus|
|5.99% – 18.99%4||$5,000 - $50,000||Visit Citizens|
|15.49% – 34.49%5||$2,000 - $25,000||Visit LendingPoint|
|6.16% – 35.89%6||$1,000 - $40,000||Visit LendingClub|
|6.99% – 18.24%7||$5,000 - $75,000||Visit Earnest|
|9.95% – 35.99%8||$2,000 - $35,000||Visit Avant|