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What Happens When Your Car Is Totaled and You Still Owe Money?

Car accidents are bad enough, but the worst kind is when a vehicle is totaled. That’s the situation where the insurance company deems the car is no longer economically repairable. If that happens, and they end up declaring the vehicle to be a total loss, it can have severe implications for the owner.

Take These Steps When Your Car Is Totaled

Following a proven formula will help you through this difficult time. If your insurance company declares your car or truck to be totaled, you need to take action.

Do You Still Owe Money on Your Car?

When drivers have a balance on an auto loan or lease, any settlement from the insurance company first gets used to pay the remaining balance on the vehicle.

If you hold the title, get your hands on it fast so you have it ready to turn iover to the insurance company. Let them know that you own the vehicle in its entirety and outright. By doing so, you’ll save everyone time.

Can You Keep the Totaled Car?

If you have the title, you can do whatever you want with the car. If held in part of a leasing company or bank, they make the final determination on what happens to the vehicle.

Salvage titles are an option for vehicle owners who wish to keep their car after an accident. However, a salvage title reduces the value of the vehicle significantly.

What Happens When You Owe Money on a Totaled Car?

An unfortunate situation happens when the insurance check doesn’t cover the remaining loan balance. In those incidents, the owner is still responsible for paying off the car.

That’s the primary reason the understanding the replacement value of a car or truck is crucial when buying insurance. The owner is always financially responsible for the remainder of the loan balance if the settlement is too low.

Some insurance policies will cover the gap between values, for an additional premium. It’s worth investigating your options because collisions happen, and preparation is the only way to mitigate losses.

It Pays to Know the Value

The insurance company may have a valuation that differs from your expectations. It’s worth researching the subject using Kelley Blue Book, NADA Black Book, searching used-car dealership, Facebook marketplace, and Craigslist to get values of comparative actual cash values. Perhaps there are features that the insurance company doesn’t know about that raise the value instantly? Let them know and give them as many details as possible to prove the car is worth as much as possible.

Don’t forget that you are owed the cost of sales tax, title and registration.

Stick with a Trusted Clarks Summit, PA Auto Body Shop

Norton’s Body Shop has over fifty years serving Northeast Pennsylvania. We understand vehicles are prone to dents, dings, and can cause more than cosmetic issues. Rust can compromise your entire vehicle. No matter the season, Norton’s Body Shop is available to help with your towing, repair, and automotive bodywork needs in the Clarks Summit, Pennsylvania, area.