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My car broke down and I still owe the bank. What should I do?
I bought a used car a little over a year ago and I still owe the bank for it. Yesterday, the car broke down completely. What should I do about the money that I owe the bank?
Pat Roache · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
You are still responsible for paying off a
car loan
as long as you still owe money—even if car repairs
are too expensive to justify fixing the car in question.- Car insurance: Repairs after a collision or other incident outside of your control may be covered underfull-coverage insurance, which most lenders require. You may even be able to pay any remaining balance on your loan if you havegap insuranceon your policy.
- Car warranty: Repairs for a mechanical issue may be covered under your car’s factory warranty or anextended car warrantyif applicable. Your dealership will be able to tell you if a warranty will cover the repairs.
There are a few ways to handle the debt on your loan if your car repairs are not covered by insurance or warranty:
- Pay off the loan: Depending on how much you owe the bank for your car, you might be able to pay off the loan in a lump sum.
- Roll it over: You can add the debt from your old car to a new car loan and pay both cars off simultaneously.
- Declare bankruptcy: Declaring Chapter 7 bankruptcy can help you get out of a tight financial spot if all else fails.
View full answer
- Gregory R.
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