Car Repair Loans in Denver: What to Do After the Hail Hits

Hail season leaves many drivers in Denver, Colorado, with a damaged car and a short list of choices. The smartest plan for car repair loans in Denver starts with insurance, moves to payment plans and low-cost credit, and treats a high-cost loan as the last thing you would consider. This guide walks through each step in order.

Why Denver cars take a beating

The Denver metro area is one of the most hail-prone urban areas in the country. Spring and summer storms regularly dent hoods, crack windshields and damage roofs, and one storm can hit thousands of cars in the same hour. Winter adds heavy snow and cold snaps that are hard on batteries, tires and brakes.

Call your insurer first

Before you look at any loan, call your auto insurer. Comprehensive coverage usually pays for hail damage, minus your deductible. That means your own cost may be a fraction of the full repair price. Not every policy includes comprehensive, so read your declarations page or ask your agent whether hail is covered.

If you have a loan on the car, your lender may require comprehensive coverage, so you may already have it. If you have only liability coverage, hail damage is probably not covered, and you will need to plan for the full bill.

What to do right after a hailstorm

A few quick steps protect your claim and your wallet:

• Take photos of the car from several angles before anything is repaired.
• Write down the date of the storm and where the car was parked.
• Report the claim to your insurer promptly and ask what the next step is.
• Keep every receipt, and do not sign over your claim to a contractor until you have read the paperwork.

If a repair is needed to keep the car safe, such as a cracked windshield, ask the insurer how to handle it so you do not lose coverage.

Understand your deductible

Your deductible is the amount you pay before insurance pays. Suppose your deductible is $500. A $2,500 hail repair would leave you with a $500 bill, and that is a very different problem from a $2,500 loan. Check your deductible now, and look for a separate hail deductible on your policy. If you cannot cover it, ask your agent what a lower deductible would add to your premium.

Get more than one estimate

Repair prices and wait times can vary across the Denver area, especially after a widespread storm. Getting two or three written estimates for the same work can show a real price gap. Ask what is included, whether parts are new or used, and how long the work will take. If your insurer suggests a preferred shop, ask whether you may use another one.

Ask the shop about a payment plan

If insurance does not cover everything, or you have no comprehensive coverage, ask the shop how you can pay. Some shops let you split the bill into a few payments, or arrange financing through a third party. Ask for the terms in writing, including any fee and the total you will pay.

Also ask whether the repair can be done in stages. A safety repair may need to happen now, while cosmetic dent work can wait until you have saved or received an insurance check.

Cheaper credit: credit unions and PALs

If you need to borrow, start with a credit union. Credit unions are nonprofit and often charge less than other lenders. Membership rules differ, so check whether you qualify through where you live, work or study. For more, see credit unions vs. high-cost lenders in Denver.

Some federal credit unions offer payday alternative loans, or PALs. The cap on a PAL is 28% interest plus an application fee of at most $20. The National Credit Union Administration explains the rules at ncua.gov. You may need to be a member for a short time first, so ask early.

Here is an illustration only, not a quote. A $1,000 personal loan at 18% a year over 12 months costs about $91.68 a month and about $100.16 in interest. Your own rate depends on your credit and the lender.

What Colorado’s 36% cap means for a small loan

Colorado voters approved Proposition 111 in November 2018, and it took effect February 1, 2019. It capped what used to be called payday loans, now called deferred deposit loans, at 36% APR. Most storefronts closed after that. You can read more in Colorado’s 36% APR cap explained.

Under the Deferred Deposit Loan Act, these rules apply:

• The loan is limited to $500 for one person at a time.
• The minimum term is six months, with no maximum term.
• If you repay early, the lender must refund a prorated share of the finance charge.
• You may cancel the loan on or before 5 p.m. the next business day after you take it.
• The loan may be renewed only once, and a returned payment can carry a charge of no more than $25 per loan.

A worked example for a repair bill

Say your insurer pays most of a hail claim, and you owe a $500 deductible. If you borrowed $500 at 36% APR and repaid it in six equal monthly payments, you would pay about $92.30 a month. The interest would be about $53.79, so you would repay about $553.79 in total.

A smaller bill costs less. Borrowing $300 on the same terms means about $55.38 a month, about $32.28 in interest, and about $332.28 repaid. If you stretched the $500 over 12 months, the payment would drop to about $50.23, but interest would rise to about $102.77, for about $602.77 in total. A lower payment often means a higher total cost.

Car-title loans put your car at risk

Colorado has no separate title-loan law. A loan secured by your car is a consumer loan that must follow the Uniform Consumer Credit Code and come from a licensed lender. If you fall behind, you can lose the car you need to get to work. Read Are car title loans legal in Colorado? before you consider one.

Be careful with online and out-of-state offers

After a storm, ads for fast cash multiply online. Lenders that lend to Coloradans should follow Colorado law and hold a Colorado license, but some claim a tribal or out-of-state bank connection to avoid it. The rules for some out-of-state bank loans are being challenged in court, and the outcome is not final. Check the lender’s license at coag.gov before you share bank details. Our guide to online loans in Denver lists what to check.

Other help in the Denver area

If the storm was a declared disaster, FEMA may offer help through disasterassistance.gov, and the Small Business Administration may offer disaster loans. If a car bill is pushing you behind on other bills, dial 2-1-1 to reach Mile High United Way. Airmen, Guardians and their families near Buckley Space Force Base in Aurora can ask the base about emergency help from the Air Force Aid Society.

Prepare for the next storm season

A little planning costs far less than a loan. Keep a small repair fund in a credit union account, sized to your deductible. Use a garage, carport or covered parking when you can during spring and summer storms. Damage that never happens costs nothing to fix.

This article is educational and is not financial or legal advice. Before you borrow, confirm the lender is licensed with the Colorado Attorney General — Consumer Credit Unit (UCCC Administrator), and read the fee disclosure in full.