What happens if my car is totaled and I owe more than it is worth?

What happens if my car is totaled and I owe more than it is worth?

If your vehicle is totaled and you still owe money on it, a payment will be made from your insurance company to your lender.  If you owe more on your vehicle than it is worth, you will most likely be responsible for paying the lender the remaining loan balance.  It is important to consult with your lender to review the terms that you agreed to.

To avoid this type of situation, you may be able to purchase Gap coverage also called Loan and Lease coverage.  This particular type of coverage is offered through lenders and insurance providers in order to protect you from having a remaining loan on a vehicle that was deemed a total loss.  It will cover the difference between the value of the totaled vehicle and the remaining loan balance.  This type of coverage generally needs to be purchased near the time that the vehicle is purchased.

 

Leave a Reply

Your email address will not be published. Required fields are marked *