Forza has mechanical damage also, I would know ive been obsessively playing the demo.
Either one of your axles could slant, ive heard they can fall off but hasn't happened to me. The engine could get shot, at varying levels of severity. The transmission can also get shot making it impossible to get out of the first gear or second gear and so on, depending on how severe the damage was. Or you might not be able to move at all, transmission dead.
I've also stayed on a track for over 40 mins so damaged that i could only go about half a mile an hour and eventually got hit enough times that my engine was hit back into place and i was able to hit 49mph on the audi R8!!! but i still couldnt make it up a hill and then a car clipped my left side rear doing like 110 and flipped me...needless to say, i was back at square one.