What to do when you total a car?

Question

I just rear-ended someone on Friday and I drive a VW Bettle. It totalled my car and just scratched the bumper of the caddy I hit. I should be getting my payment tmrw from it. But I needed to know if I get the full check from them or do they pay my loan and then pay me the difference? I have really good terms and I would rather get a full check and pay cash for a new car and they continue paying on my bugs loan. Will I be able to?

Answer 1

Did your insurance send an adjuster who told you the car was a total?  If not, you don't know that it is.  The insurance will pay to fix it, or fair market value, whichever is the least amount.

If you have a lender, the check from the insurance will go to them, not to you.  If the fair market value is less that the amount you owe on your own, you will continue to make payments until the balance reaches zero.

You don't get a full check and use that to buy something else and tell the lender to wait, it doesn't work that way.

And since you rear ended someone, your insurance will only pay out if you have collision coverage since it was your fault by definition, less you deductible amount.  So there is an excellent chance you will have a balance due after everything is said and done.

Remember, it's fair market value, not replacement costs, or what you paid when you bought the car new.

Answer 2

since the car is financed, the check will go to the lender first.  they will apply it to the loan balance and any remaining amount they will give to you.

if the amount of the insurance check does not cover the loan, you will owe the difference.

if you have gap insurance, it will kick in.

depending on how much you put down, how long you have had the loan and your deductible, determines whether you pay or get payed.

in most cases, you pay due to the cars rapid deappreciation.