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Car accident loans in Canada
Find out how to cover your expenses after a car accident so that you can get back on your feet.
It’s no secret that car accidents can cost a fortune. From legal costs to car repairs to hospital bills and lost time at work, you could end up spending thousands of dollars to recover from even the smallest fender-bender.
Find out how you can cover your expenses after a car accident and what you’ll need to get approved for a loan.
What is a car accident loan?
Car accident loans are designed to provide quick and easy financial relief after a collision. These loans come in many forms and can be used to tide you over while you take time off work or wait for money from a legal settlement or your insurance company.
The money you borrow can be used to cover unexpected costs including medical bills, legal fees, vehicle repairs and general living expenses. Some car accident loans only have to be paid back if you win your legal case against the driver of the other vehicle. Others will require mandatory repayments, and be approved based on your credit score and proof of income.
For these types of loans, you’ll need to make payments in monthly installments over a set period of time. You’ll also need to be careful to stay on top of payments to avoid defaulting since this could damage your credit score.
What can I use a car accident loan for?
You should be able to use a car accident loan for any number of expenses, even those not directly related to your accident. Some of the most common uses include:
- Medical bills. You could end up paying out-of-pocket for short- and long-term medical care (from ambulance bills to physiotherapy to counselling).
- Legal fees. A lawsuit against another driver could cost you thousands of dollars in legal fees before a settlement is paid out.
- Vehicle repairs. You could get stuck with the cost of repairing your car to get it back on the road.
- Rental cars. If your vehicle is in the shop, you might have to rent a car for a couple of weeks to get around.
- Basic expenses. If you end up losing wages, you may need help covering your rent, bill payments and general living expenses.
What options are available to me after an accident?
There are dedicated car accident loans, but you can also use some of the following types of loans to cover your expenses after an accident.
- Secured loans. Secured loans come with lower interest rates but require you to put up collateral (like your house or vehicle) to secure your payments.
- Unsecured loans. These loans give you the option to borrow without securing your payments against some form of collateral but can be more expensive.
- Guarantor loans. You’ll need to arrange a co-signer with good credit to help cover your loan payments if you default, but you’ll get better terms than if you apply alone.
- Peer-to-peer loans. Peer-to-peer loans offer lower rates, more flexibility, quicker turnaround and fewer fees than many other loan providers.
- Bad credit loans. You may be able to qualify for a bad credit or no credit check loan if your credit score is low.
How can I apply for a car accident loan?
Many lenders will have different application requirements, but you should be able to apply for a car accident loan if you follow these basic steps.
- Check your credit score. Get started by checking your credit score through a credit bureau like Equifax or TransUnion. This should give you an idea about what type of loan you can qualify for.
- Compare lenders. Look for the loan that is the best fit for your financial situation and compare at least 3-4 lenders to find the best interest rates and terms.
- Fill out your application. Once you’ve settled on a lender, you can fill out your application online or in-person. If you want to go with a lender on this site, you can just click [Go to Site] beside the lender’s name to be redirected to their online application.
- Verify your identity and income. You’ll usually need to give a piece of ID to prove your identity, along with pay stubs or tax forms to prove your employment status or income.
What alternative options do I have?
You may want to look into other options if you already have a ton of debt:
- File an insurance claim. Submit a claim to get reimbursed for your expenses by your insurance company (but be aware that you may need to pay a deductible).
- Look into credit card coverage. Find out what your credit card insurance will cover for extra costs like rental cars or roadside assistance.
- Pay with a low-interest card. You could pay for your extra expenses on a low-interest credit card (some with less than 8% APR) so long as you pay it off as quickly as possible.
- Borrow from family or friends. Ask your family or friends for an interest-free loan to help cover the costs from your accident.
- Find a low-cost mechanic. Shop around for the best price on car repairs to save hundreds of dollars.
- Look for conditional legal fees. See if you can find a lawyer who will only collect legal fees if you win your settlement.
Car accidents can wreak havoc on your finances but you have plenty of options to help cover the costs. Find out whether you’re eligible for a car accident loan and compare lenders to get the best deal.
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