What to Do If Your Financed Car Is Written Off
It's common practice to take out auto loans in order to spread out the cost of such a large purchase. However, accidents do occur, and if your financed car is totaled, you may find yourself in a precarious and perplexing position. Although it may appear to be impossible, there are measures you can take to guarantee you are not left with a financial burden. In this article, we'll discuss what to do if your financed car is totaled, including how to deal with insurance, pay off the remaining sum, and proceed with buying a new car.
It’s common practice to take out auto loans in order to spread out the cost of such a large purchase. However, accidents do occur, and if your financed car is totaled, you may find yourself in a precarious and perplexing position. Although it may appear to be impossible, there are measures you can take to guarantee you are not left with a financial burden. In this article, we’ll discuss what to do if your financed car is totaled, including how to deal with insurance, pay off the remaining sum, and proceed with buying a new car.
What Does It Mean for a Car to Be “Written Off?”
A vehicle is considered “written off” when the cost to repair it exceeds its value. The insurance company has determined that the vehicle is a total loss and will not pay for any necessary repairs. Instead, you’ll receive a check for the lesser of the automobile’s actual cash value (if any) and the balance of your car loan. If the automobile owner still owes more on the loan than the insurance company is willing to pay, they may find themselves in a difficult position. A salvage title indicates that the vehicle was declared too damaged for safe use on public roads and was therefore written off. So what should you do if your financed car is written off?
So, Your Financed Car Is Written Off. What Should You Do Now?
More information on what to do if your financed car is totaled is provided below.
Understand Your Insurance Coverage:
The terms of your insurance policy, such as your deductible, coverage limitations, and any supplementary coverage you may have, should not be misunderstood. With this data, you can calculate how much you can expect to receive from your insurer in the event of a total loss and see if you qualify for any additional coverage. Reviewing your insurance policy and consulting with an insurance professional ensure you know what you’re covered for.
Determine the Damage:
Your insurance provider will decide if your car is a total loss once you report the collision to them. If this is the case, you can expect a reimbursement equal to the vehicle’s ACV (after depreciation). To determine the loss, take the amount still owed on the car loan and deduct the ACV. You are liable for paying the difference between the ACV and your loan balance.
Talk to Your Financial Institution:
If you still have a balance on your auto loan after an accident and insurance settlement, you should contact your lender as soon as possible. You must give them a copy of the insurance check and any other supporting paperwork. In the event of a deficiency, you and your lender may be able to come to an arrangement on the outstanding sum.
Think About Gap Coverage:
Gap insurance can assist you in bridging the financial gap between your loan’s current balance and your car’s actual cash value. You can supplement your existing auto insurance with gap protection. If you don’t have gap insurance, you might have to pay the difference out of cash.
Figure Out What to Do Next:
After you have received the insurance settlement and spoken with your lender, you will need to decide what to do next. A new car may be in order if you find yourself still in need of one. Be sure to compare rates and terms from multiple lenders if you plan to finance or lease a new vehicle. Until you can afford a new car, other options include buying a used car or taking public transport.
In conclusion, having your financed car declared a total loss can be an emotionally taxing and exhausting affair. You may lessen the financial impact and make the most appropriate decisions by learning about your insurance coverage, estimating the loss, talking to your lender, thinking about gap insurance, and figuring out the next steps. Keep in mind that you have support around you and that there are options for dealing with the aftermath of a devastating loss. If you keep your thoughts in order, take the initiative, and ask for help when you need it, you will be able to solve your problem.