Everything you need to know about Car Accident Lawsuit Loans

Updated november 13, 2020

When it comes to car accident loans, most people don’t think about them until they need one.

By then they are understandably desperate, what with mounting bills and medical expenses.

That is when they get taken advantage of by deep pocket insurance companies or unscrupulous lenders who smell blood in the water.

If you find yourself in this situation, take a deep breath.

After spending a few minutes reading this page, which you should do before entering into a complex financial transaction, you will have all the information needed to make an informed decision about your car accident loan.

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What is a car accident loan?

A car accident loan is a cash advance on a lawsuit for injuries sustained in an auto accident.

Cases can take years to complete and accident victims often need funds for bills, medical and other expenses.

Accident loans allow injured plaintiffs to borrow against their future settlement.

How long do car accident cases take?

Every personal injury case is different, and therefore, there is no way to know exactly how long a specific case will take.  

However, keep in mind that injury lawsuits almost always involve deep pocket insurance companies with a team of lawyers.  One of the strategies they use to reduce the amount they pay out on claims is to drag it out (sometime for years).

Insurance companies make money by charging a premium on the risk that an accident will occur. When those accidents happen, they try to pay out as little as possible to maximize their bottom line.

A major part of the insurance industry’s strategy to pay out less for accident injuries is to delay the settlement of claims as long as possible.

They hope that car accident victims “tap out” and accept less than they rightfully deserve.

You probably won’t be surprised to learn that big insurance is one of the chief opponents of lawsuit funding.

Why? It hurts their bottom line.

Pre-settlement funding offers plaintiffs a last resort option to preserve their bargaining power while waiting for a fair offer.

If you are a car accident victim and feel like you need a lifeline, reach out for free and see if we can help.

Risk free but expensive

Accident loans are non-recourse, which means that your case serves as collateral for the loan.

It also means if you lose your case, you don’t have to pay back any of the loan.

That’s right. If you lose your case you get to keep the funds advanced to you – for free. Much like your lawyer’s fee for your lawsuit, you only pay if you win.

But beware: accident loans carry high interest rates – much higher than traditional financing options. More on that later.

Therefore, they are recommended only as a last resort funding option.

How car accident loans work

If you read our page on lawsuit loans you already know that car accident loans are actually cash advances.

The reason: a potential future recovery from your case represents a present day asset. A car accident cash advance gives you some of that asset value today.

Here are the steps in a typical funding transaction:

1. Apply – online or by phone. Applications should always be free. If a funder tries to charge you an application fee, walk away. To apply you’ll need your name, some basics about your case like how the accident happened, and your lawyer’s contact information.

2. Review – after you apply, the funding company will contact your attorney and get all the information needed to evaluate your case. This information allows the funder to decide how much, if at all, they want to advance against your lawsuit.

3. Get Funds – if approved, you will receive funds quickly. Almost every funding company will send you check, western union, or direct deposit within 24 hours of approval.

Qualifying for a car accident cash advance

The nice thing about a car accident cash advance is that qualification is based entirely on the merits of your lawsuit.

Your financial history has no bearing on whether you qualify or for how much.

There are no credit checks, background checks or employment verification – other than for any lost wages as part of your case value.

Before you qualify for a car accident loan you must first have retained a lawyer and filed a lawsuit.

If you do not yet have an attorney please fill out our attorney request form and a qualified personal injury attorney will contact you right away.

If you retained a lawyer but have not yet filed a lawsuit, we may be able to get you pre-qualified for when you do.

Factors that determine funding amount

The amount of funding that you can receive from a car accident cash advance depends on the value of your case. Funders typically fund up to 10-15% of the case value.

So what is your case worth? It depends on the facts of your case. Here are some of the factors that funders look at to decide:


The liability of your case refers to who is at fault and for how much of the car accident. If you are partially at fault for the accident your case value is likely to be reduced.

These are some of the most common types of car accident cases that receive funding:

  • Rear-end collision
  • Side-impact collision
  • Head-on collision
  • Single car accident
  • Vehicle rollover
  • Hit and run
  • Uber and Lyft accidents
  • Defective tires
  • Uninsured/Underinsured motorist claims
  • Parking lot accidents
  • Drunk driving accidents


Your case value is largely driven by the injuries you sustained in the accident. The reasons for this are obvious.

Severe injuries from a car accident require significant medical treatment and expenses, employment issues and pain and suffering.

Some common injuries in car accident cases are:

  • Spinal cord injury
  • Head Injuries (traumatic brain injuries)
  • Herniated disk
  • Whiplash
  • Broken ribs
  • Collapsed lungs
  • Broken bones
  • Ligament damage
  • Post-traumatic stress disorder
  • Airbag injuries
  • Wrongful death


Case values can be limited by the amount of available insurance coverage for the claim.

Insurance policies have policy limits (maximum amounts they pay out for an accident).

For example, if you have a case worth $500,000, but the insurance coverage available is only $15,000, your case value could be limited to $15,000.

Your lawyer should explain how policy limits may affect your recovery.


Case values can vary depending on the state (and county) the case is brought in.

Different states have different insurance requirements, burdens of proof (what your lawyer has to prove in the case), evidentiary rules (evidence allowed in the case), and judges.

Counties within a state can affect case value as certain counties may return higher verdicts on average.

Your lawyer may have an idea of what your case is worth, but they (rightfully) may be reluctant to give you a dollar amount so as not to give you the impression that a certain result is guaranteed.

Every car accident injury lawsuit is unique and should be evaluated based on its many factors.

Car accident loan costs

Make no mistake – car accident loans are expensive.

Much more expensive than traditional financing options like a bank loan or home equity loan.

Therefore, an advance on your case should be your last resort for funding.

Some other less expensive financing options include: bank loans, home equity loans, borrowing from family, or even credit cards.

Check out this chart comparing the average interest rates of home equity loans, personal loans, credit cards and car accident loans:

That is a huge difference!

But sometimes you just don’t have any other viable options to come up with cash fast.

So just how expensive is an advance on your car accident lawsuit?

That depends on the facts of your case. But expect to pay at least 3% a month interest, usually compounding (which results in more than 3% a month).

Also be prepared for fees which add up to another 5-15% of the funding amount.

How long does it take to get a car accident cash advance?

Most funders typically advertise funding times of 24 hours or less. While it is true that funds can be dispersed that quickly, the average funding time is typically a bit longer.

Still, car accident loans are still one of the fastest funding options for plaintiffs in lawsuits.

Pre-settlement vs settlement car accident funding

Pre-settlement funding is a cash advance before a settlement is made. Settlement car accident funding is an advance on an executed settlement.

You might be wondering why anyone would need settlement funding. After all, they’ve already settled their case.

Unfortunately, the waiting does not end upon a settlement agreement in your car accident lawsuit. There is almost always a waiting period between settlement agreement and fund disbursement.

The good news about car accident settlement funding is that the interests rates are lower, funds can be advanced quicker, and a larger percentage of the case value can be funded, than with pre-settlement loans.

Some common reasons for post settlement delay include:

Signing the release of claim – Insurance companies require you sign a release upon settlement. A release is a written agreement that the auto accident claim is satisfied and can never be brought again. This usually takes at least a few days to prepare and sign.

Filing with the court – When you agree to settle a car accident case, your lawsuit still exists on the court docket. Your lawyer and defense counsel need to submit your settlement to the court so that the case can properly be disposed of in the court system.

Lien payoffs – Often times accident cases have liens that need to be paid off before funds can be dispersed to the plaintiff. Liens are monies owed to third parties secured by the settlement. Typical lien holders in car accident lawsuits are health care providers and lawsuit funders.

Your lawyer is responsible for paying off any lienholders before dispersing funds to you. Your attorney may also attempt to negotiate those liens down, which can take additional time.

Pros and cons of car accident loans

Before getting a car accident cash advance you should weigh the advantages and disadvantages. Check out this infographic for a side by side comparison:


While everyone’s personal situation is different, below are a few of the main advantages of car accident loans.

Fast – Funding can be advanced in as little as 24 hours.

Risk-Free – Perhaps the best part of a car accident loan is that you don’t have to pay back any of the funds if you lose your case. In that sense, car accident loans reduce your risk that you lose the case.

Sometimes insurance companies don’t want to settle a case and try their luck with a jury. Any trial lawyer worth their weight will tell you just how much of a gamble juries can be.

No credit check – Because car accident loans are cash advances on your future recovery, your financial history is irrelevant to whether you qualify. As such, there is no credit check or financial history limitations.


Car accident loans are not always the right choice for those in need of fast cash. Here are some downsides to consider.

Cost – We can’t tell you enough: car accident loans are more expensive than almost every other financing option.

Qualifying – Lawsuit funding companies can be selective about who they advance money to. According to a data study, 52%  of all funding applications were denied.

Lending companies might view the risk of your case too high. Alternatively, the lending company might only be looking for certain types of car accident cases, or certain dollar amounts of funding contracts.

Accordingly, plaintiffs sometimes have to apply to numerous lending companies before they get an offer.

Finding a funder – Funding offers can vary greatly for the same reasons as mentioned above about qualifying.  Rates and fees from two different funders can be significantly different. Therefore, you should get as many offers as possible to avoid paying any unnecessary costs.

Fundsuit will help you apply to numerous reputable funders in minutes – all with one single application.

Car Accident Loan FAQ

How do I choose a car accident lawsuit funding company?

The best way to choose a lawsuit funding company is to apply to multiple funders and compare the rates and fees.

The “best” lawsuit funding company for you will most likely be the one offering the lowest rates and fees. The difference can be thousands of dollars come settlement time. 

A word of caution: it may be difficult to determine the true cost of your case advance.  Many funding companies have complex hidden fees that compound and make your payback much higher than you might expect. You should ask for a worksheet that shows the total you are required to pay back at certain intervals.

How can FundSuit help me with my car accident loan?

FundSuit will help you find the lowest interest rates for your loan.

When you apply with us, we underwrite your case and determine whether we want to offer an advance and for what interest rate.

We also speak with a number of other funding partners to see if they are willing to offer funding and their interest rates. We will pass those offers on to you, so you can choose the lowest rate. We will also help you understand exactly how much you will need to pay back – even if you choose funding from a different lawsuit loan company.

We will give you a breakdown of the maximum amounts required for payback at different time periods.  No surprises.

Do I need a lawyer to get a car accident loan?

You do in fact need a lawyer in order to get a car accident loan. There are a few reasons:

First, your lawyer verifies the case details during the application process. The funding company will speak with your attorney to get all the necessary details.

Second, your lawyer is responsible for making sure all lien holders (including lawsuit funding companies) get paid out of the settlement.

Can my lawyer loan me money for my accident case?

No, your lawyer cannot loan you money for your case. Doing so would create a conflict of interest and therefore is considered unethical. If you need an advance on your car accident case you should speak to a lawsuit funding company.

Occasionally, your attorney will recommend a funding company.  Keep in mind there may be other funding companies willing to offer lower rates.

Do I have to pay taxes on my loan or settlement?

According to the IRS: “If you receive a settlement for personal physical injuries or physical sickness and did not take an itemized deduction for medical expenses related to the injury or sickness in prior years, the full amount is non-taxable.”

However, if you receive any lost wages or lost profits, these are generally taxable.

You should speak with your attorney about your specific situation, and, if necessary, a certified tax professional.

Is there a deadline for when I can file my lawsuit?

There is a deadline, also known as a statute of limitations, for filing a car accident injury lawsuit.

The statute of limitations for personal injury lawsuits varies by state. If you have retained an attorney, they will be mindful of the statute.

In what states can I get a car accident cash advance?

Most funders will provide advances for car accident cases in every state except the following: Arkansas, Kansas, Kentucky, Maryland, North Carolina.

What can I use my auto accident loan proceeds for?

Money you get from a car accident loan is yours to do with as you please. You can use the funds in any way that you wish.

Due to the high cost of funding for a car accident case, it is wise to only obtain funding for essential expenses, as a last resort.  Proceeds are typically used for medical bills, housing, food, etc.

What if the other driver doesn't have insurance?

If you are injured in a car accident caused by a driver who does not have insurance, you may still have an insurance claim under your own insurance policy.

This type of insurance is known as uninsured / under-insured motorist (UM/UIM) coverage.

You should check your insurance policy declarations page to see if you have UM/UIM coverage. Some states require a minimum amount of such coverage and others do not.

Your should discuss all possible insurance coverage for your claim with your attorney.

What do I do if I was the victim of a hit and run?

Car accident insurance policies treat hit and run accidents the same as car accidents caused by uninsured motorists.

Therefore, you may have a claim under your policies UM/UIM provision, if applicable.  You should check your insurance policy declarations page to see if you have UM/UIM coverage.

Can I get a car accident loan if I was the passenger in an Uber or Lyft?

Yes. Ridesharing accident victims can get advances on their lawsuits. 

Like funding for any other car accident case, applicants will qualify based on the merits of their case and the potential case value.

Can I get a car accident loan if I previously filed for bankruptcy?

Generally, yes.

However, underwriters will need to determine which credits, if any, will be paid out from your settlement (and for how much).

Will a settlement funding company have a say in my case?

No, funders are not allowed to have any say in your lawsuit decisions.

Funding companies will get periodic updates about your case from you lawyer for their files, but they will not have any say in strategy decisions or negotiations.

Does my lawyer need to know I am getting a loan for my case?

Yes, your attorney will need to provide details to the funder during the application process.

Your lawyer will also need to facilitate repayment after your case is settled. Additionally, attorneys keep track of any outstanding liens on cases as part of their counsel.

Does the insurance company need to know I am getting a loan for my case?

No, only you, the funding company and your attorney have to know about the loan transaction.

What if my case goes to trial?

If your case goes to trial, a jury will decide the outcome of the case. If the jury finds in your favor, your car accident settlement loan will be paid back out of the jury award.

If you lose your case and the jury awards you nothing, you do not have to pay back the money advanced to you. You keep the funds free and clear.

There is always a risk when going to trial. Your lawyer should explain those risks, and weigh them against any settlement offers, when deciding if you should proceed to trial.

Your lawsuit loan funder should never have any say in your decision about whether or not to go to trial. That is a decision entirely up to you and your lawyer.

Should I use the funder that my lawyer referred me to?

Maybe, but not necessarily. It is important that you trust your attorney for your car accident case. However, you should also realize that their incentives are not always aligned with yours when it comes to a car accident cash advance.

There is a reason personal injury lawyers can’t personally advance you money on your case –  because it creates a conflict of interest. Your lawyer’s sole purpose should be advocating on your behalf in your injury claim.

As such, your lawyer should always explain the downsides of a car accident loan. They might (should) even try to convince you not to get one. That is a good thing.

A bad sign would be your lawyer aggressively pushing for you to get a lawsuit loan with a specific funder. You should always ask your lawyer why they want you to go with a specific funder.

It is possible their reasons may be legitimate. However, they should always encourage you to shop around for the lowest rate.