I’ve Totaled My Vehicle But I Still Owe Money. Now What?

Your car getting totaled is both financially and emotionally wrecking. This is much true if you still owe money from your car loan. In this case, the process of filing for an insurance claim becomes more complicated than usual. No one can predict an accident, especially if another driver is at fault. But in any case that your car got totaled in the midst of paying the premiums, here are the things you need to know:

What does it mean to get a car ‘totaled’?

Totaled is a term insurance companies use to refer to vehicles with damages that cost more than its indicate value. Some insurers will declare a vehicle ‘totaled’ or a ‘total loss’ if the repair costs are at least 80% of the car’s value.

When this happens, the insurance company will pay you the declared value of your car instead of shouldering the repair cost. Some insurers will replace your vehicle instead.

What should I do?

If your insurer declares your car totaled and you still have money owed, the first thing you have to do is to compare repair prices. There’s a chance that you can find lower quotes that will save your vehicle from being a total loss.

However, if the other repair quotes don’t turn out in your favor, it’s best to accept that your car has been totaled already.

What happens after that? Well, your insurance company will pay you the amount of the vehicle before the accident. If it’s lower than the value of your car upon purchase, you’d have to shell out the rest.

Aside from the remaining cost, you also have to shoulder a collision deductible. For example, you still owe $30,000 for your car, but it’s only worth $25,000 upon total loss. If your collision deductible is $2,000, your insurance company would only have to pay $23,000. The rest of the money owed will be your out-of-pocket expense.

Take note that your insurance company’s job is to fix your car, not your finances. This is the same reason why you should always ask your insurance company to appraise your vehicle regularly. New auto glass may help retain the purchasing value of your vehicle as well as internal upgrades.

Can I still own the totaled car?

If you decide to go with the repairs, most states will require you to acquire a salvage title for the vehicle. With this, you can’t register for a plate unless all the damages have been fixed, and the car passed rigorous inspections.

Take note that many insurers will not sell a comprehensive policy upon knowing that your vehicle has been totaled, or has a salvage title.

However, if you decided to get rid of the vehicle, you can auction it off or sell it to a junkyard for a reasonable price. This is usually done by your insurer, where they keep the amount and give you a settlement.

We recommend shopping around and perusing your options well. That way, you can find the best choice that will save you from financial ruin.