What do I do if my car is totaled and I owe more money on my loan?

I have bad credit and still owe $10,000 on my car after my insurance payout. What should I do? I'm still going to need to get another car.

Answer
“When your insurance payout doesn’t cover the full balance of your loan and you don’t have gap insurance, you’re still required to pay the remaining balance.
You do have a few options. If you can get by without a car for a few months, you could try to pay down the balance of your loan before shopping for a new car. It may also be worth trying to find a used car that you could pay cash for.
If neither of these options is feasible, you may have to reach out to lenders to see if they will allow you to roll the cost of your prior loan into another vehicle loan.
Since you have bad credit, this may be hard, as creditors could see you as a risk for non-payment or a loan default. You’ll have to weigh your options and see what will work best for you.
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Emily Maracle
Answered on May 03, 2021
Emily Maracle is a car insurance specialist living in New York. Originally from the Pacific Northwest, she has a degree in English Literature and a background in customer service. She enjoys cooking, gardening, and living sustainably. In the future, she can't wait to upgrade to a hybrid or electric car.
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