How to Finance a Minor Car Accident

How to Finance a Minor Car Accident

Accidents happen. Even when you’re following the rules of the road and driving defensively, somebody can come along and ding your car in the parking lot or rear-end you in gridlock. Unfortunately, most people will someday experience a minor car accident, and even the smallest damage can incur a hefty bill. 

Do you know how you’ll pay for it? There are many safe and responsible ways to handle this financial emergency. Here are some of your options.


Many people involved in collisions choose to go through their insurance to help cover the costs, including repairs to the vehicles and surrounding property, medical bills, and legal fees. 

But when it comes to minor accidents, you may want to work with the other driver to settle the issue without making a claim. This is because a claim could make a dent in the at-fault driver’s policy, causing their rates to skyrocket for a few years following the accident. 

Here, it’s important to know what will happen to your rates if you make a claim. While some insurance companies may not increase your rates, there’s a greater chance that yours will. 

You’ll also need to assess the kind of damage that you may need to fix. A large collision that results in injuries or a crushed car may require insurance, no matter what you think about your premiums. However, small dents and dings may be affordable for both parties to pay out-of-pocket.

Emergency Fund

Even if you have car insurance, you may have to pay out-of-pocket. You may have a deductible that you must pay depending on your policy. 

Whether you go through insurance or not, any repairs you make out-of-pocket should come out of your emergency fund. As a stash of savings designed for unexpected bills, this is exactly what the fund was designed for. 

The standard benchmark for savings in this fund is three to six months’ worth of living expenses. In most cases, this should be more than enough to cover a minor car accident.

Installment Loan

Without savings and payday still a few weeks away, even a $200 bill may be more than you can afford. But if filing a claim increases your monthly premiums significantly, you may still opt to pay out-of-pocket to protect your rates. 

At this point, you may want to research online installment loans. These loans offer a quick application process, and, if approved, you’ll receive funds to help you cover these unexpected emergency repairs. 

If you’re living on a shoestring budget, the online loans monthly payment schedule may be a more manageable option than a direct payday loan. While payday loans require you to repay what you owe in one lump sum by your next payday, an online installment loan breaks down your payment over multiple installments scheduled over multiple weeks or months.

Things to Keep in Mind if You Pay Out-Of-Pocket

Whether you use savings or an installment loan, make sure you document any out-of-pocket payments. Take photos of the vehicles, fill out a police report, and keep your invoices.  This will protect you in case something goes wrong.