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What Happens if You Total Your Vehicle But Still Owe Money On It?

Car
If you’ve been in an auto collision and your car is totaled, you may be concerned about what happens if you still owe money on it. Let’s break it down.

Accidents are an unfortunate reality of car driving and car ownership. No one ever wants to be in one, but the truth is that we drive faster than ever these days, with far more distractions inside and outside of the car than we ever had in the past. So no matter how careful, alert, and cautious you are, you could still be in an accident, and it helps to prepare yourself with as much knowledge as possible. So what happens if you’re in a car collision and the car is totaled, but you still owe money on it? Read on to find out.

What Is “Total Loss”

When we saw that a car is totaled, what we are referring to is the insurance designation “total loss”. Total loss doesn’t actually have anything to do with the type or amount of damage exactly. It is about the relationship between the value of the car and the cost to repair the collision damage. If the cost to repair the car is more than the value of the car (or in some states more than a percentage of the value, like 80% of total value), the insurance company will declare it a total loss and pay out the value (the lower cost) rather than pay to repair it (the higher cost).

Do Independent Research

When the insurance company declares your car a total loss, you still have the option to contest the decision. Do your own research about the value of your vehicle, rather than blindly accepting their estimation. You can also take your vehicle to additional auto body shops and get other collision repair quotes to challenge their assessment of the repair costs. If you do your research and the numbers still don’t add up in favor of repair, you will likely have to accept that the car is a loss. 

What Happen Next

When your car is a total loss and you are making payments on it to a financing lender, the insurance company will pay out to the lender first, and anything remaining will come to you. Unfortunately, because of the way cars depreciate in value, you may actually owe more than the car is worth. This is why it is so important to research and make sure your insurer is appraising your car’s value fairly. If they are, you are still responsible for the remaining balance on the loan, even though the car is gone, unless you purchased additional Gap Insurance when you bought the car.

Drop By Liberty Collision Today!

Liberty Collision is here to assist you. As a larger repair and paint shop working within the Randallstown area, our expert technicians are capable of tackling every element of collision repair. We love working with our community and beyond, so drop on by and give us a visit! Our shop is located at 9339 Liberty Rd Randallstown, MD 21132 and we can be contacted by phone at (443) 405-6908 or email at libertycollisionmd@gmail.com. Drop by our shop Monday through Friday, 8 AM to 5 PM. For future updates and news, give us a follow on Facebook, Twitter, LinkedIn, Pinterest, and YouTube.

This entry was posted on Friday, July 5th, 2019 at 10:30 am. Both comments and pings are currently closed.