What happens when my financed car is totaled?
I have full coverage on my financed car and it looks like it's going to be marked a total loss. I have a year and a half left on my loan. Do I still have to keep making my payments? How would I get a new vehicle?
“With comprehensive coverage and collision coverage, any damage to your vehicle—as long as it isn’t excluded in your policy—will be covered. This means that even if your vehicle is marked a total loss, you will receive a payout.
The payout you receive will be based on the actual cash value of your vehicle, which is essentially your car’s original price minus depreciation. If the value covers what you owe on your loan, your loan will be paid in full. If there is anything left on your loan, you will be responsible for that balance.
You should keep making payments if there is a balance remaining and you don’t have gap insurance. If you’re able to, you can try to pay off your loan before shopping for a new car.
Otherwise, you may need to see if a lender is willing to roll the remaining balance into a new car loan.
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