How can I make sure the claim payout is enough to pay my car loan in full?

I was involved in an accident where the other driver hit me and was at fault. Her insurance company is trying to pay me $6,500 for my car, but I still owe $9,200 on the loan. It isn't fair that I will be out of a car and still have to make car payments. What can I do?

Answer provided by
Shannon Martin
Answered on Apr 29, 2021
Shannon is an expert in personal lines liability insurance with 13 + years of insurance industry experience. She also served as a special insurance liaison to AARP members for 6 of those years. She is a graduate of UL Lafayette and currently resides in NY with her family. Shannon is also an amateur juggler, ukulele player, and is a time travel paradox theory enthusiast.
“This can be a tight spot to be in. First, check to see if you purchased gap insurance at the time you bought your car. If you did, then you are in luck—gap insurance will pay the difference between what is owed to the lender and what your claim check is for.
If you do not have gap insurance, then your options are limited. Insurance companies are required to pay for the actual cash value of the car, not the loan, which includes interest. If the value of your vehicle is lower than your current loan balance, this means that most of your payments have gone toward the interest of the loan.
Once you get the appraisal, make sure it seems accurate and that they are comparing similar cars to get this number. Unfortunately, if they do not negotiate the appraisal, you will be stuck still making payments on a car you don’t have anymore.

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