What Happens If Your Car Is Totaled And You Still Owe On The Loan?

Give this article a thorough read to find out what happens if your car is totaled and you still owe on the loan.

In the event that the accident that has occured is due to your own carelessness and fault, and your vehicle costs more to fix than what it’s worth or can’t be fixed, then your insurance agency pays you the estimation of the vehicle (less any deductible) in the event that you have the correct inclusions. However, if you were not to be blamed for the accident, then you can decide to record a case with the other driver’s insurance agency.

At the point when you’re associated with an auto collision, your life can go to a sudden end, particularly in the event that you are admitted to a hospital and your vehicle is harmed to such an extent that it must be supplanted. At the point when you’re without a vehicle, it can affect for all intents and purposes each part of your life. Unexpectedly, day by day exercises like heading to and from work, getting things done, and setting off to the specialist demonstrate testing. Furthermore, on the off chance that you have a family, it’s surprisingly more terrible. In any case, having a totaled vehicle brings significantly a larger number of issues than those referenced previously.

On the off chance that your vehicle is totaled, you actually owe on the credit, does the insurance agency take care of the advance or would you say you are obligated for the equalization? Losing your regular vehicle to an auto crash can be a noteworthy disturbance to your every day schedule. To exacerbate the situation, if your vehicle was financed with a credit you actually owe a parity on that advance, there could be monetary repercussions. Peruse on to become familiar with what to do on the off chance that you actually owe cash on a vehicle that has been regarded as a “total loss”.

Let us look at what happens if your car is totaled and you still owe on the loan. So, what are you waiting for? Let us jump right in!

What does it mean by a total loss or totaled car?

At the point when a car is involved in an accident, it will for the most part can be categorized as one of two classifications:

  • The car can be repaired and fixed
  • The car is completely ruined that the insurance agencies regard it as a total loss

A total loss in vehicle protection is a term used by the insurance company when the expense to fix your vehicle is more than the estimation of the vehicle. Your insurance agency will regularly finish a review of the harmed vehicle before formally pronouncing it as a total loss. While evaluating your vehicle, most insurance plans factor in the condition and structure of your vehicle notwithstanding any state laws. In certain states, a vehicle is naturally regarded to be a complete misfortune if the expense to fix it surpasses a specific level of the vehicle’s worth.

Every car insurance organization has its own standards in deciding if a vehicle is a total loss following a mishap. Yet, normally, when the expense of fixing a vehicle surpasses a specific percentage of the estimation of the vehicle, the vehicle is announced as a total loss. The benchmark rate most insurance agencies use is around 80%. For instance, if your vehicle is estimated to be around $10,000, the car insurance company may approve fixes if the costs to fix the car are under $8,000. In the event that the fix gauges surpass that limit, the insurance agency pronounces the vehicle a total loss.

In instances of a total loss, the insurance agency won’t approve fixes. Rather, the insurance agency will compose a check to the offended party (for example the individual not obligated for the mishap) and it will incorporate the lien holder’s name to guarantee the bank or money organization is paid.

What happens if your car is totaled and you still owe on the loan?

Getting your car totaled can completely destroy your year, and it’s particularly horrible when you actually owe cash on the vehicle. That is an undeniably regular actuality as more individuals need to take out longer vehicle advances to purchase vehicles. In the event that your vehicle is totaled, you actually owe more than it’s worth, your vehicle insurance agency will pay you just the vehicle’s actual cash value (ACV). That is the vehicle’s honest evaluation the moment before it was harmed in the mishap.

Suppose that the insurance agency esteemed your vehicle as a total loss, so it cut a cheque for $20,000, the honest evaluation of the vehicle. Be that as it may, you owe $25,000 on the vehicle advance. For this situation, you are liable for the remaining $5,000 on the automobile credit despite the fact that you no longer have the vehicle. You are as yet liable for making the month to month advance installments until the advance is paid off.

To keep away from this circumstance, we suggest buying gap protection. Gap protection is a discretionary, add-on vehicle protection inclusion that can enable certain drivers to bridge the gap between the sum they owe on their vehicle and the vehicle’s actual cash value (ACV) in case of a mishap. A vehicle’s real money esteem is the vehicle’s financial incentive at the hour of the mishap, not the vehicle’s unique cost.

What should you do if you still owe a loan on your totaled car?

In the event that you owe more than what your vehicle is worth, you should find a way to secure yourself. These means incorporate the accompanying:

Be sure the ACV is correct

It is significantly more critical that you get the genuine ACV when you will in any case owe an advance on your vehicle, so you have to check the insurance agency’s valuation. As a rule, the protection agent might be offering not as much as what you are owed. You can get a gauge of the ACV by going to online destinations and discovering the retail cost and the vendor exchange sum. Be sure you have your vehicle’s make, model, trim, mileage, and any discretionary highlights so you acquire a precise figure. You will include the retail and exchange sums and separation the complete by two to decide the ACV. It is a smart thought to rehash this cycle on more than one site. Doing this could build your settlement by a large number of dollars—which would be utilized to decrease the credit balance you owe.

File a gap insurance claim

In the event that you bought gap protection when you got your vehicle credit, you can contact the insurance agency straightforwardly or have your moneylender make a case. Gap protection may pay the distinction between the ACV and what is owed on your vehicle advance so you don’t owe a parity.

Pay your car loan payments

Until your protection guarantee is settled, you should keep making your vehicle credit installments on an opportune premise to not default on your advance. In the event that you didn’t buy hole protection and your vehicle is added up to, you will owe any parity of your vehicle credit over the ACV installment. You are lawfully liable for paying the full parity owed to the bank despite the fact that you no longer have your vehicle and may need to back the acquisition of another one. You should contact the bank to make installment courses of action. In the event that you won’t have a huge upfront installment to pay on the vehicle you buy to supplant your added up to one, you might need to consider buying hole protection to secure yourself in the event that this new vehicle is added up to later on.

How can I get a car loan after total loss?

On the off chance that you have to take out another car loan to buy your substitution vehicle, you can apply for one whenever. Exploration your alternatives and be set up to talk with a moneylender about your current car advance on your credit report. Persistence is a temperance when supplanting a vehicle after an absolute misfortune. The cycle can here and there be drawn out, yet once your case is finished, you ought to get a check to help supplant your vehicle.

There are different types of car loans you can get after total loss. These loans include:

Peer-to-peer auto loans

This alternative is for those that have great credit, since all shared advances require a high FICO assessment. Shared advances are like customary credits, however they’re supported by private financial specialists. With shared credits, you’ll actually have an installment timetable you’ll actually need to pay intrigue, however distributed rates are regularly in a way that is better than business rates.

Credit unions

Credit associations are the best spot for most advances, and that is on the grounds that credit associations are network banks where you can become more acquainted with your tellers and they become more acquainted with you. That implies you have a more close to home relationship with the people who will loan you cash. Credit associations are a particularly decent decision for those with normal or helpless credit, since credit associations can offer better terms.

Pay cash

At long last, your most ideal alternative is to pay money, yet that simply isn’t feasible for the vast majority. In any case, that is another explanation: purchasing utilized is a smart thought. Paying in real money liberates you from paying premium and making exorbitant regularly scheduled installments. Furthermore, on the off chance that you apply for a line of credit to pay for your new vehicle, you’ll regularly need to get far reaching protection. You can pick whatever protection plan you’d like on the off chance that you own your vehicle through and through.

How to get a new car after total loss?

Purchasing another vehicle after an absolute misfortune can once in a while be baffling after previously managing the consequence of a significant mishap. Some significant insurance agencies will supplant a vehicle on the off chance that they are viewed as new, which is normally under a quarter of a year old. Organizations may likewise offer substitution inclusion for your vehicle for an extra cost every month.

Notwithstanding the way that you have an ensured substitution strategy, the insurance agency is answerable for making you entire after the mishap. This implies they should give you the genuine money estimation of your vehicle at the time mishap occurred, less your deductible for impact.

When you have decided your advance result sum and the sum that the insurance agency plans to pay for the misfortune, you can ascertain how much cash you should put down on your next vehicle. Moreover, you can approach your insurance agency for the time period for when you will get the check.

Do you have to pay insurance on a totaled car?

You are still legitimately committed to make your month to month advance installments to the bank or monetary moneylender until the credit is paid off. The way that your vehicle was an absolute misfortune doesn’t change your credit reimbursement terms. Your legitimate commitment to reimburse the advance proceeds. The bank or moneylender actually has the option to full reimbursement of the advance, despite the fact that you may no longer have your vehicle.

In the event that you have gap protection, this kind of protection inclusion may pay the distinction between the measure of the insurance agency’s check and the sum you actually owe on the vehicle credit. To decide whether you have gap inclusion, counsel the language of your protection strategy or talk with your protection specialist.


Now that you have read this article, you know about all the basics regarding what happens if your car is totaled and you still owe on the loan. However, there are a ton of significant contemplations when your vehicle is added up to you actually owe cash on it. Proficient help can help explain your privileges and assist you with deciding the most ideal approach.

Sandra Johnson

Sandra Johnson

Sandra Johnson was a few years out of school and took a job as a life insurance agent in California, selling coverage door-to-door for Prudential. The experience taught her about the technical components of insurance and its benefits for individuals and society, as well as the misunderstandings people often have about insurance. She has over ten years’ experience in the insurance industry, having worked as both a Broker and Underwriter, assisting clients across a broad range of industries. At Insurance Noon, Sarah diligently gathers all the required information and curates up pieces to provide meaningful insurance solutions. Her personal value proposition is to demonstrate a genuine interest in always adding value for clients.Her determined approach to guiding clients has turned her into a platinum adviser to multiple insurers.

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