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The Pros and Cons of Taking Out a Car Accident Loan While Waiting for Your Settlement

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Filed under Automotive, Editorial

Many people would advise you not to take out a car accident loan! After all, there are a few different ways you can raise money. 

Some people withdraw money from their savings and some borrow from friends or family, or find ways to cut down on expenses. Others might take out a reverse mortgage to free up some cash. Some apply for government disability programs, or even take advantage of specific state laws that say plaintiffs are entitled to some emergency funds from a lawyer, if he/she takes the case. 

But there are also people that just don’t want to go through the trouble of all those other options, and instead, want part of their settlement money now!

Assuming you don’t like the other options mentioned, car accident loans might be a serious consideration at this point. So what we decided to do was to list the pros and cons of car accident loans to let you know what’s going to happen, once you sign that contract. 

Pros of Car Accident Loans

1. You’ll Get Your Much-Needed Money Sooner!

Expenses after a major car accident are relentless. Not only might you have to pay high medical bills, but you also have to worry about missing work, legal fees, and even keeping up your daily standard of living. 

If you’re out of work or have no car, how will you pay for rent, transportation, food and other monthly bills? With car accident loans, after approval, the only delay is when your attorney must contact the lending company to discuss a few extra details. That’s it – and that explains why some people can get their car accident loans in as little as 24-48 hours!

2. You Can Get More Money!

Depending on the lending contract and the details of your case, you could get anywhere from 25% to maybe 40-50% of your settlement upfront. 

The main issue is, realistically speaking, how much can you expect to get from a settlement based on similar cases your attorney has won? The nature of your injury and accident will determine the amount, and that directly affects the upfront cash advance. 

But what’s 20% of one million dollars? What’s 20% of even $100,000? If you’ve suffered a major car collision, and it was the other driver’s fault, then you’re likely to win the case – and probably settle out of court. The fact that companies are willing to give non-recourse lawsuit loans upfront just shows you how likely you are to win, if specific criteria are met. 

3. Upfront Money Avoids Compromise

While your goal is to settle out of court, the fact of the matter is the opposing insurance companies, attorneys, and the other motorists will try to give you far less of a settlement than you deserve. In fact, it’s predictable that you’ll get a few very low compensation offers. 

And guess what? If you’re in dire straits financially, you might settle out of court just to get that money so you can pay bills on time. But lawsuit funding actually gives you and your attorney plenty of time to build a stronger case and wait for a larger settlement.

Visit for a more thorough discussion of what terms are available for accident victims. 

Cons of Car Accident Loans

1. Your Credit and Finances May Affect the Contract 

Because these are kind of, sort of “loans”, that does mean credit checks and your monthly finances WILL play a part in determining the upfront cash advance, as well as the interest rate. 

Qualifying for a lawsuit loan is easy to do, if you suffer a major car accident that wasn’t your fault. But the actual price can vary on your financial picture. 

2. Interest Rates Can Be High 

If you choose the right lender, interest rates aren’t a big deal. But if you choose a predatory lender, those interest rates (not to mention other hidden fees) can be a killer. 

You don’t have to pay if you lose the case, but if you win the case, that doesn’t necessarily mean you’re going to end up better off than before. You really have to make a budget and figure out the final costs, along with your attorney. 

3. You Might Not Qualify

Good news, a major accident means that you probably will qualify. But the bad news is that if determining fault in the collision is complicated, it may not always work in your favor. Your qualification is based on a major accident happening, someone making a mistake, and a personal injury that hurt you physically and financially. 

Factors like DUI, reckless driving, or even minor traffic errors can make all the difference. 

But if the case can be argued, you may not qualify. Even if you do qualify, you may be waiting for that settlement for years on end. 

Contact an Attorney First!

While you can talk to a car accident lender at any time, your most important point of contact is an attorney with experience in car accident injury cases. In fact, there are several steps you should take after an accident as soon as possible. Find out what you might be entitled to and let a professional fight for your rights!


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