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If I totaled my vehicle and it's financed so that i owe more than it's worth, do i owe the difference?

asked by ni33cole (20)

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Tags:  debt  insurance  vehicles

answers

Yes, you owe the remainder that is owed on the vehicle loan. This is also known as being 'upside down' on the loan. Typically, this situation is caused when the vehicle's value depreciates at a faster rate than the loan is being repaid. The company that made the loan to make the purchase must be made whole.

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posted by Carrie43 (17)
6 votes

The short answer is yes. If you do not have GAP insurance which covers the difference, you will be responsible to pay the difference to your finance company. Depending on how much you owe, your finance company may be willing to accept the insurance payout and consider the vehicle paid in full.

6 votes

Yes. This is great time to think about why you got a loan for more than the net worth of the vehicle and why the bank decided to give you this loan. Usually the sales are done at "arm's length" meaning that you don't have anything to gain by over-paying the seller of the car.

6 votes

Yes you do owe the difference. It is called "being upside down" on your car when you owe more than it is worth. It would be the same as if you sold it for less than you paid for it, you would still have to pay the difference between what you borrowed and what you got out of the car.

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posted by diva (161)
6 votes

Unless you have insured your vehicle in case of an accident where the vehicle is written of and the amount you owe too, then you will have to pay the difference to the finance company you owe. Get the loan insured in case of the inevitable where your debt will be written in case of an accident.

6 votes

Some insurance policies or car loan agreements will include forgiveness of a debt such as this if a car is totaled. Generally, however, you will owe the difference. Laws on this can also vary by state, but in the vast majority of states you will owe what is left on the loan.

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posted by John (7868)
6 votes

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