After an accident, it’s tempting to take a car accident loan and get your money as soon as possible. No one can blame you for that, because a serious car accident may put you out of work temporarily, incur high medical bills, or even incur high legal fees.
Isn’t it better to have the money now? The simple answer is that yes, it’s better to get a loan now if you need the money – but it’s just as important that you do not settle for less than you deserve.
In this article, we’re going to talk about what to expect after you take out a car accident loan and what you have to be vigilant about, when it comes to working with your attorney and your lender.
The Pre-Settlement Funding Process
You can talk to a car accident loan company directly, although in most cases, you do want to find an attorney first.
An attorney will not inhibit your ability to get a car accident loan in advance. In fact, all he or she will do is make recommendations about the contract the company offers, the amount, as well as the settlement amount you want to fight for.
Once you do find a lender that’s willing to offer advanced funding, the typical amount is 20% of the total settlement upfront. However, you can get more funding in some situations.
Once you fill out an application, you and your attorney can discuss the contract terms and make sure it seems fair, and that you get as much funding as you need immediately.
Will They Do A Credit Check?
Tricky question, because since this is a cash advance loan, your financial situation and credit may play a factor – but mainly in determining the upfront cash you get. The major injury you sustain, as well as your lawyer’s confidence in winning the case, is enough to pre-qualify you for a car accident loan.
After qualifying and signing the contract, you can get your money in as little as a few days. The time delay is mainly for online correspondence between the lender and the attorney’s office.
Read more about applying for car accident loans and direct funding by clicking here.
Do You Have To Pay Back The Loan Back?
It depends on whether your lawyer wins the case or not. In most cases, if you lose you owe nothing. These are not real loans, but non-recourse cash advances, or more like an investment for the lender, who trusts the judgment of the experienced attorney.
Lending companies do take a risk by funding a settlement that may or may not be coming. But it’s worth noting a car accident loan is not the only option for upfront payment. Some states offer you the option of getting limited funds from your lawyer. There are also government disability programs that might help.
You’ll Need To Pay Interest On Your Car Accident Loan
But if you do get a settlement, or win a court trial, then you will have to pay the amount back when you get your settlement – along with interest. Your interest rates may be as low as 10-25% or may skyrocket to 60% if you go with a bad lending contract.
Therefore, it’s important to not only talk to your lawyer first, but also research different car accident loan companies, and see their interest rates for yourself. Some might offer compound interest while others offer simple interest. You also have to watch out for hidden fees or extra costs.
This is why it’s imperative a lawyer give you an expert opinion on the contract and if the car accident loan is worth it. The lawyer can’t research the information for you, but he or she can give you advice on a contract you bring for a review.
But even before you start talking litigation or a lawsuit loan, be sure to review our list of steps to take after a car crash. Sometimes these minor details can play a big part in building your case! Read our refresher course on the subject and stay safe.