How would it work if I had a wreck that wasn't my fault and that totaled my car, but I still owed on the loan

Pieandchips

The insurance company would owe you the actual cash value of your vehicle. This is similar to blue book, but takes into account recent sales of vehicles that of a similar year/make/model in your area and additional depreciation for things such as tire tread...

If you were upside down on your loan, they would still only pay you the acv for your vehicle. In order for the difference to be paid, you would have to carry GAP insurance (get it, it pays the gap between what it's worth and what you owe). Otherwise, you would still owe the difference to the lender.

The lender would be paid directly in the case of a total loss, and then you would have to maintain your payments until you satisfied the balance. The loan is not transferrable to a new car as there is no longer collateral for the loan (no more car to sell).

The best way to avoid this is to carry GAP if you are upside-down on a loan. :)

Better you ask this question now versus afterward like everyone else seems to do. Nice work.

S17V

If you were in a car accident and your vehicle was totalled, the insurance company would have a duty to pay the lienholder first, and yes if you still owed additional monies on the vehicle, you would be responsible - it would be up to you and the lienholder if you could transfer the remaining lien onto a new car.

CowboyBill

Your insurance company has an obligation to pay the owner of the car (the bank) the 5K. You will be paid the difference.

rifleman01@verizon.net

This happened to me, and I got lucky! I had a '98 Mercury Gran Marquis that I paid a total of $11,800+ for, but the insurance company said was only worth $9,900. My payments were low enough that I could afford to send a bit more in each month, and so I did. (I really fight at the dealer when I get a loan. I never spend as much as as I can, I always leave a cushion of a few bucks.)

Well, when I wrecked the car in a single car accident (Hydro-plane accident, I got a ticket.) the insurance company still paid, and over the period of time I was putting an extra $30 here, and extra $40 there on the payment I was no longer upside-down on the loan. I got a few bucks back that I used on a down payment for the next thing I'm gonna wreck. You would get the (Should get, the insurance companies are sneaky!) $1,000 dollars difference betwen the amount still owed, and the value of the car. But if the amounts were reversed, you would still owe the $1,000!

I usually try to pay cash for a car so I don't have that problem. But today it's getting harder and harder to find decent transportation without going to a dealer. Better to find an insurance company (Like they have for motorcycles.) that will let you decide how much your ride is worth, and insure you for that amount. It's a little more expensive, but cheaper in the short run than getting gap insurance, or getting caught with your pants down because some dipstick hit you.

scokeman

Even better suggestion, The company you have your loan thru tell them that you loan insurance on top so that if you wreck your car and the insurance company you are with only pays off the kelly value the other will kick in and cover the remainder owed. Good luck

eimi_amyg

your insurance company would pay the loan off and give you any money left from the value of the car. be sure that your car is worth more than what you owe on it, otherwise you should get gap insurance so that if you do have a total loss your not stuck with making payments to the finance company because you insurance is only gonna pay blue book value

purplebear

If it isn't your fault the other driver's insurance company must cover your losses... but, beware!! If the other driver is not insured or is under insured you are absolutely in trouble. I suggest that you carry something called uninsured/under insured motorist coverage. It really isn't that costly at all but it will protect you. See your insurance agent immediately !!!!!!
Now, if your vehicle is totaled, your leinholder will be paid, you will not be paid. You have no choice in the matter really. The loan must be satisfied first. If there is any extra money to be awarded after that it will be paid to you and you will have to start over with a new set of car payments and a new car. Stinks, doesn't it? Sometimes the vehicle is called "totaled" but you can buy it back and have it repaired... but really, who would want to? That is entirely up to you though. I just offer this...do everything in your power to be a safe driver and also a defensive driver. Chances are you won't have to worry about this event.

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