Unfortunately, car accidents are always a risk as long as you are driving your car. You may be a safe and responsible driver, but not everyone is, and accidents can happen. A new driver may be careless, or a driver may not be paying attention to the road. According to the National Highway Traffic Administration, car accidents happen every 60 seconds.
Whether the car accident is minor or major, it could impact your title loan, since a car accident could affect the value of your vehicle. If you are like most car title loan borrowers, you’re probably asking yourself- “What if I get into an accident while I have a car title loan?” While you can’t always prevent car accidents from happening, you can prepare yourself for the aftermath and understand what a car title loan lender will expect if an accident were to occur.
How Do Car Title Loans Work?
Before you can understand the nuances of car accidents and your car title loan, it is important to first understand how the loan works. Title loans are a unique type of installment loan that will allow you to borrow cash by using your title as collateral. By using your title as collateral, you can bypass the need for perfect credit history. For a title loan, eligibility is based on the value of your car. During the repayment process of your loan, if the value of your car changes exponentially through an accident, it can affect your loan.
One of the key factors in the approval process for a title loan is the condition of your vehicle. This is what your loan amount will be based on. Generally, you can borrow up to 75% of your car’s value. The more your car is worth, the more you can potentially borrow through a title loan. Eligibility for a title loan is based upon:
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- Your Income
- The Value and Condition of Your Vehicle
- Your Ability to Afford a Loan
Your credit history is not the most important part of the approval process. Instead, the value of your car and your income is!
What Happens If I Get into an Accident While I Have a Car Title Loan?
When you sign your loan contract, you agree to the terms and conditions of the loan.
If the collateral for the loan, or your vehicle, is totaled, then it could change the terms of the loan. If you get into a vehicle accident at any point throughout your title loan, it is important to immediately call and report it to your loan agent.
Remember that because you signed the loan contract, you must continue to make your loan payments until your insurance claim has been settled. If multiple vehicles were involved, you may need to wait on the other insurance company. Your payments must be made on time, even if your case is being investigated by other insurance companies.
What Should I Not Do If I Get into an Accident While I Have a Car Title Loan?
While car accidents are unexpected and can knock you off your feet, you do need to report them to your car title loan company. Withholding this information can be damaging in the long run!
If you can’t afford your payments for whatever reason, the loan could go into default and the car may be repossessed. Then, it could be sold to cover the rest of your loan. If it does not completely satisfy your debt, you are still responsible for covering the rest.
To avoid this situation, contact your loan company right away if you can’t make your payments. You may have more options than you think, including title loan refinancing. With title loan companies like ChoiceCash Title Loans, you can expect your loan agents to be available seven days a week to help you.
What Does My Insurance Do If I Get into an Accident While I Have a Car Title Loan?
Accidents can happen, but that’s what insurance was made for! If you get into an accident while you have a car title loan, a lot of the insurance side of things is similar to any other car accident that may happen.
Your insurance coverage will be the deciding factor in what happens with your accident case and your car title loan. There are many different types of insurance plans that exist, so your first step is to look through your plan and compare it to what happened. Typically, there are a few main types of insurance coverage:
- Liability Insurance Coverage: This plan will cover the cost of damage to the other vehicles involved in a car accident and the medical care of the injured individuals. Typically, there is a set amount that the insurance will pay if an individual or vehicle is affected by the accident. If you are deemed at fault for a car accident, liability coverage will take care of the costs up to your policy limit.
- Comprehensive Coverage: This plan can help cover you if the unexpected happens, such as weather damage. This can be the ideal plan for the just-in-case scenarios. This plan will typically cover things that are unrelated to car accidents. Things like vehicle theft or an animal hitting your car can be covered under this plan.
- Collision Coverage: This is the most ideal plan to have, as it will help with damage to your own car in an accident. While liability coverage will only help the other party in an accident, collision coverage will cover both. Collision coverage policies can cover both your liability and property damage to your own vehicle. If your car is totaled in an accident, collision coverage will pay for the value of your car.
If you are considering taking out a title loan, collision coverage is the most ideal plan to have. In the event that your car is considered a total loss in an accident, your insurance could pay for the value of your vehicle. This could be used to pay off the remainder of the loan! Remember, after an accident you are still responsible for paying off your title loan. Collision coverage can make that easier on your life and your bank account!
What is a Car Accident Settlement?
If you are involved in a car accident, you will need to file a claim with your insurance. This can often start an investigation to see who is truly at fault in the accident. In some cases, the insurance company will rule a no-fault accident. Once the investigation is completed, the insurance company will make a settlement offer. This can often take a considerable amount of time, as there are often negotiations made and counteroffers.
If you do receive a settlement check for a car accident while you have a title loan, you can apply it towards your loan balance to settle the debt. You are still expected to pay off your loan and your car acts as the collateral for it, even though the collateral may no longer exist or be in your possession. In most cases, title loan companies will require full coverage insurance to prevent a stressful financial situation in the event of a car accident.
What Do Car Title Loan Companies Expect if I Get into an Accident While I Have a Car Title Loan?
If you do get into a car accident while you have a title loan, your first step is to call your title loan company. A loan agent can walk you through the right steps and give you the advice you need to go forward. To learn more about the ins and outs of car title loans, give a loan agent a call at (855) 914-2945. Or visit the FAQ page of ChoiceCash Title Loans to learn more about the expectations of a car title loan!
How You Can Protect Yourself if You Get into an Accident While You Have a Car Title Loan
While being a safe driver can lessen your chances of getting into a car accident, you may not be able to avoid them entirely. Some of the most common car accidents are rear-end collisions that are caused by a driver not paying attention. Even if the situation is not your fault, accidents may happen, and it is wise to get the best coverage possible if you can afford it! If you get into an accident while you have a car title loan, there are ways you can protect yourself. Get the right insurance coverage for your state and situation!
During the approval process for a title loan, you can speak with a loan agent and learn about the right coverage options for your financial situation. To learn more about your title loan options, check out what ChoiceCash Title Loans can do for you! Head over to the website or give a loan agent a call at any time of day at (855) 914-2945.