Many drivers finance their car. When an accident happens, it can be difficult to know the implications. Will you owe money? If so, how much?
If you have a car loan or finance agreement, that effectively means you do not own your vehicle outright. After an accident in a financed vehicle, next steps will depend on how much damage the car sustained and how much money you owe on your loan or agreement. Keep reading to learn more about what to expect if you have crashed a financed car.
If you are involved in a motor vehicle accident with a financed car, you will need to determine if you have adequate insurance coverage.
If you are at fault for the accident, insurance coverage may cover damages, depending on your insurance policy. After filing an accident claim with your insurance company, you may receive a settlement to cover the cost, or part of the cost, of the vehicle damage. However, if another driver is at fault for the accident, their insurance company may pay. The answer depends on what insurance coverage is available to you.
According to the Insurance Information Institute (III) most new cars lose up to 20 percent of value within one year. Some insurance policies cover the “depreciated value” of a car or the current market value at the time of the accident claim. So, over time, the amount of the loan may exceed the vehicle’s actual value.
Essentially, if you are in an accident and total your car, an insurance company may not cover the cost of your entire loan. In this case, you may be responsible for making up the difference.
In some circumstances, a vehicle may be deemed a “total loss” after an accident. This means that the cost to fix or repair the vehicle exceeds its value. Even if your car is determined to be a total loss, if insurance coverage is not sufficient, you may be obligated to continue paying off your loan or finance agreement.
If a financed car is totaled (or it’s determined to be stolen), GAP insurance can cover the difference between the vehicle’s worth and the amount owed in the loan or agreement. GAP insurance is particularly useful when you still owe a significant amount on a financed vehicle.
If you have been injured in a car accident, call William Mattar law offices. You may be entitled to financial compensation, and our experienced car accident lawyers can help you pursue the damages you deserve. Schedule a free initial consultation today by submitting our online form or contacting our offices at (844) 444-4444.