My car got totalled, I still owe financing on it, what happens now?
October 3, 2024 1:16 PM Subscribe
Drat, my car got hit by a distracted driver and it's totalled. The car was financed and I still owe money on it. Insurance is offering an amount I feel is a little low. A few questions inside, and I'd appreciate any advice.
A year ago, a distracted driver was totally at fault and smashed my old sedan (nobody was hurt). I got a $12,000 insurance payout, which I put aside untouched as an emergency fund - still have it.
Then I chose a used SUV for $33,000, an accident-free 2020 Subaru Forester Convenience with 33,000 km on it when I bought it, and 38,500 km now.
I financed it with a 4 year term. Meaning, over the past year, I paid $8000, and I still owe $26,000.
Today ANOTHER DISTRACTED DRIVER TOTALLED MY SUV. Other driver was 100% at fault (they rear-ended my car at a red light). Luckily nobody was hurt; accident was reported, and my insurance company offered $28,000, which seems low to me.
My car had some extras - it came with a $300 welded trailer hitch which took impact in the crash, not sure if it's removeable or salvageable. I bought $300 floor mats that only fit one generation of Subarus so they'll be hard to re-sell. It also has nice factory alloy hub caps and a spare tire.
What should I do now...
Can I negotiate with the insurance people to offer more for the car? How?
The car is in a salvage yard. When I go to empty it, I was thinking I'd strip the spare tire and hubcaps, and resell them - or, will doing that get me in trouble with the insurance company?
Will our premiums go up? We've had bad luck with several cars getting totalled by distracted drivers - always 100% the other drivers' fault, and always in our general neighbourhood but at different times and intersections. Will this matter?
They offered a rental car for one week (!) How the heck could I possibly replace a car in one week? It's busy season for my job, so I actually won't have time to shop for a car at all until late October. How can I get them to extend the rental period?
What happens to the money I still owe for the car financing? I don't understand how now I'm supposed to get another car - I owe the dealer $26,000 and I'm being offered $28,000 so now I have $2000 and no car?! That doesn't seem right at all. (I do still have that first $12,000). Can you help me parse out the money part? I feel like I'm getting shafted, but I'm bad at math so maybe there's a better way to think about it?? It sure sounds bad!
Anything else I should consider?
A year ago, a distracted driver was totally at fault and smashed my old sedan (nobody was hurt). I got a $12,000 insurance payout, which I put aside untouched as an emergency fund - still have it.
Then I chose a used SUV for $33,000, an accident-free 2020 Subaru Forester Convenience with 33,000 km on it when I bought it, and 38,500 km now.
I financed it with a 4 year term. Meaning, over the past year, I paid $8000, and I still owe $26,000.
Today ANOTHER DISTRACTED DRIVER TOTALLED MY SUV. Other driver was 100% at fault (they rear-ended my car at a red light). Luckily nobody was hurt; accident was reported, and my insurance company offered $28,000, which seems low to me.
My car had some extras - it came with a $300 welded trailer hitch which took impact in the crash, not sure if it's removeable or salvageable. I bought $300 floor mats that only fit one generation of Subarus so they'll be hard to re-sell. It also has nice factory alloy hub caps and a spare tire.
What should I do now...
Can I negotiate with the insurance people to offer more for the car? How?
The car is in a salvage yard. When I go to empty it, I was thinking I'd strip the spare tire and hubcaps, and resell them - or, will doing that get me in trouble with the insurance company?
Will our premiums go up? We've had bad luck with several cars getting totalled by distracted drivers - always 100% the other drivers' fault, and always in our general neighbourhood but at different times and intersections. Will this matter?
They offered a rental car for one week (!) How the heck could I possibly replace a car in one week? It's busy season for my job, so I actually won't have time to shop for a car at all until late October. How can I get them to extend the rental period?
What happens to the money I still owe for the car financing? I don't understand how now I'm supposed to get another car - I owe the dealer $26,000 and I'm being offered $28,000 so now I have $2000 and no car?! That doesn't seem right at all. (I do still have that first $12,000). Can you help me parse out the money part? I feel like I'm getting shafted, but I'm bad at math so maybe there's a better way to think about it?? It sure sounds bad!
Anything else I should consider?
You need to talk to whoever you got the financing through (either the dealership itself or a bank, I'm guessing.) Gap insurance may have been included in the terms of the financing, and in either case, your insurance (or, really, the other driver's insurance) should be negotiating with them directly. Do not spend any paid-out money or take anything other than your personal belongings from the totaled car until you've talked to them and know that they're in touch with the insurance company about your case.
If your insurance has determined that the other driver was at fault, it should not change your premiums. If they go up, you need to get on your insurance; it's their job to seek remedy from the other insurance company.
posted by Why Is The World In Love Again? at 1:34 PM on October 3
If your insurance has determined that the other driver was at fault, it should not change your premiums. If they go up, you need to get on your insurance; it's their job to seek remedy from the other insurance company.
posted by Why Is The World In Love Again? at 1:34 PM on October 3
So sorry to hear about your car! From my experience, you can definitely negotiate with your insurance company. I had to replace a car twice in the past 5 years because of a collision, and this is what I did:
- Make sure they have the correct trim and accounted for any details like your hitch and things like snow tires (where applicable)
- If your state/province has sales tax, they should include a relevant amount for that in the replacement value (where I live in Ontario that's 13% for HST)
- I'd look up listings for your specific car year/trim/mileage in your area to see if they are in the ballpark of what your insurance company is offering you.
For my last car, I wrote a polite email to my insurance after their initial offer pointing out they had the wrong trim, missed my snow tires, and didn't include replacing my son's carseat (which may or may not be relevant to you). I also felt the offer was low based on listings in my area for the same trim/year/KM and asked for a reassessment. I attached 3 relevant listings to my email from when I took a look. They came up $4500 to account for the correct trim on my vehicle and the replacement costs for snow tires/my kids carseat.
No advice on the financing part unfortunately as I have never financed a vehicle, hopefully season else has advice for that!
posted by snowysoul at 1:36 PM on October 3 [3 favorites]
- Make sure they have the correct trim and accounted for any details like your hitch and things like snow tires (where applicable)
- If your state/province has sales tax, they should include a relevant amount for that in the replacement value (where I live in Ontario that's 13% for HST)
- I'd look up listings for your specific car year/trim/mileage in your area to see if they are in the ballpark of what your insurance company is offering you.
For my last car, I wrote a polite email to my insurance after their initial offer pointing out they had the wrong trim, missed my snow tires, and didn't include replacing my son's carseat (which may or may not be relevant to you). I also felt the offer was low based on listings in my area for the same trim/year/KM and asked for a reassessment. I attached 3 relevant listings to my email from when I took a look. They came up $4500 to account for the correct trim on my vehicle and the replacement costs for snow tires/my kids carseat.
No advice on the financing part unfortunately as I have never financed a vehicle, hopefully season else has advice for that!
posted by snowysoul at 1:36 PM on October 3 [3 favorites]
Gap insurance wouldn’t help here since you’re getting more than your loan. The core premise unfortunately is right: because you owed most of the car’s value, most of your insurance payment will be paying off that loan. You would have to get a 2x payment to end up with both a replacement car and as much cash as your old car was worth.
What are they offering you for pain and suffering? Try to get more that way. You should be getting cash above your car’s value and above any medical bills just for having been in a crash.
Any lost work? You can try to add that money to the claim.
What is the car with that many miles and that trim worth in your area? You can get a better offer, maybe.
Keep in mind they want to lowball you, but they also don’t want you to get a lawyer, so they’ll work with you to a degree.
posted by michaelh at 1:36 PM on October 3 [2 favorites]
What are they offering you for pain and suffering? Try to get more that way. You should be getting cash above your car’s value and above any medical bills just for having been in a crash.
Any lost work? You can try to add that money to the claim.
What is the car with that many miles and that trim worth in your area? You can get a better offer, maybe.
Keep in mind they want to lowball you, but they also don’t want you to get a lawyer, so they’ll work with you to a degree.
posted by michaelh at 1:36 PM on October 3 [2 favorites]
I'm glad you're not hurt, but adrenaline covers a load of sins. I would resist the temptation to say anything like "I'm fine but my car is totaled" to anybody, extra-especially anybody who works for an insurance company.
(1) I don't know how it works in your locale, but anything that's not nailed down in the car is something you can technically take with you. If the insurance company gives you grief for taking the tires....the car's already at a junkyard, just put the cheapest replacements you can back on there. When my car was totaled by somebody running a red light, I took everything I could lift. Even the floor mats lol. As a matter of fact, do not be surprised if you get to the junkyard and everything of value is already stripped.
(2) It's not uncommon for a car to be worth a smaller amount than it's financed for; as forthright mentions above, that's the risk that gap insurance protects against. You're not actually underwater, if they're going to give you $28K and you only owe $26K, but I hear you; it sucks.
(3) @Negotiating---absolutely!!! Insist on ANY and EVERY special thing about your car - the $28K number probably just fell out of a computer program based on Year/Make/Model/Mileage. Custom trailer hitch? Point that out! (You got rear-ended, that hitch isn't coming back.) Heated seats! Performance struts! Sunroof! Whatever, anything other than engine/wheels/brakes goes on the list of things that made this car something more.
(4) "They" offered a rental car for one week... is "they" the other party's insurance? Your insurance? Because when I've needed this benefit, it was for up-to-30-days. "They" can't tell you that you didn't have a busy week at work, and plans this weekend, that are going to preclude you from buying a car within 7days of being subjected to this wreck.
(5) It sucks, but yeah - basically somebody who was not a responsible driver straight up took money out of your pocket. You can lean on insurance for any bodily injury, and for the vehicle, but the fact is that car was worth more to you than you're ever going to get back.
posted by adekllny at 1:36 PM on October 3 [3 favorites]
(1) I don't know how it works in your locale, but anything that's not nailed down in the car is something you can technically take with you. If the insurance company gives you grief for taking the tires....the car's already at a junkyard, just put the cheapest replacements you can back on there. When my car was totaled by somebody running a red light, I took everything I could lift. Even the floor mats lol. As a matter of fact, do not be surprised if you get to the junkyard and everything of value is already stripped.
(2) It's not uncommon for a car to be worth a smaller amount than it's financed for; as forthright mentions above, that's the risk that gap insurance protects against. You're not actually underwater, if they're going to give you $28K and you only owe $26K, but I hear you; it sucks.
(3) @Negotiating---absolutely!!! Insist on ANY and EVERY special thing about your car - the $28K number probably just fell out of a computer program based on Year/Make/Model/Mileage. Custom trailer hitch? Point that out! (You got rear-ended, that hitch isn't coming back.) Heated seats! Performance struts! Sunroof! Whatever, anything other than engine/wheels/brakes goes on the list of things that made this car something more.
(4) "They" offered a rental car for one week... is "they" the other party's insurance? Your insurance? Because when I've needed this benefit, it was for up-to-30-days. "They" can't tell you that you didn't have a busy week at work, and plans this weekend, that are going to preclude you from buying a car within 7days of being subjected to this wreck.
(5) It sucks, but yeah - basically somebody who was not a responsible driver straight up took money out of your pocket. You can lean on insurance for any bodily injury, and for the vehicle, but the fact is that car was worth more to you than you're ever going to get back.
posted by adekllny at 1:36 PM on October 3 [3 favorites]
Yes, you can negotiate based on your coverage. Don't take the spare without insurance company's approval. They own it. The salvage yard owns it after that. When my ex-wife borrowed my truck and somehow managed to have a one car accident on a highway straightaway, I took any and every personal belonging, but had to get permission for taking my after market radio/stereo.
If you don't like the insurance company's off, you can salvage/part it out yourself. If you got rear-ended, the engine is worth something. Doors, glass, etc all worth something.
posted by JohnnyGunn at 1:37 PM on October 3
If you don't like the insurance company's off, you can salvage/part it out yourself. If you got rear-ended, the engine is worth something. Doors, glass, etc all worth something.
posted by JohnnyGunn at 1:37 PM on October 3
My SO and I negotiated an increased insurance payout in a similar situation.
We had a car that blew an engine at around 60k, and *** of America covered the rebuild (or a new engine, I don't remember). We were thrilled because hey, new engine, resets the clock.
Then we got rear-ended a few months later, car was totalled. We ended up getting X + $1200 or so from the insurance company after we explained that the car had just had a new engine put in. They verified and made the new offer with no fuss.
posted by Doofus Magoo at 2:23 PM on October 3
We had a car that blew an engine at around 60k, and *** of America covered the rebuild (or a new engine, I don't remember). We were thrilled because hey, new engine, resets the clock.
Then we got rear-ended a few months later, car was totalled. We ended up getting X + $1200 or so from the insurance company after we explained that the car had just had a new engine put in. They verified and made the new offer with no fuss.
posted by Doofus Magoo at 2:23 PM on October 3
What happens to the money I still owe for the car financing? I don't understand how now I'm supposed to get another car - I owe the dealer $26,000 and I'm being offered $28,000 so now I have $2000 and no car?!
The key here is that you didn't actually own the car. Insurance pays what they deem the car is worth. In this case, your car is ostensibly worth $26k, and they gave you $28k. Most of that total is not your money at all. If you had paid cash for it, then the $28k would be what you'd use to get a new car. But since you didn't actually own the car, that money is meant to go the real owner, ie your lender. So as far as the insurance company is concerned, the matter is done – how you choose to solve the issue of a new vehicle is not their problem. At least now you have $2k to go toward the down payment on your next car, which is not nothing.
posted by Molasses808 at 4:44 PM on October 3 [10 favorites]
The key here is that you didn't actually own the car. Insurance pays what they deem the car is worth. In this case, your car is ostensibly worth $26k, and they gave you $28k. Most of that total is not your money at all. If you had paid cash for it, then the $28k would be what you'd use to get a new car. But since you didn't actually own the car, that money is meant to go the real owner, ie your lender. So as far as the insurance company is concerned, the matter is done – how you choose to solve the issue of a new vehicle is not their problem. At least now you have $2k to go toward the down payment on your next car, which is not nothing.
posted by Molasses808 at 4:44 PM on October 3 [10 favorites]
To further what Molasses808 said: If $28k is indeed the "fair market value" of the car then in principle you could go out and buy an equivalent car for that price tomorrow, using the $2k from your insurance as a down payment and borrowing $26k for the rest. And then you'd be exactly where you were before the accident, with an equivalent car and $26k in debt.
posted by Johnny Assay at 7:04 PM on October 3 [7 favorites]
posted by Johnny Assay at 7:04 PM on October 3 [7 favorites]
This exact case is why all those lawyers that advertise on busses exist. I'm not sure I'd recommend in your case (and I don't really know anyone who has used one) but maybe consider it? They basically fight the person who crashed into you for a larger settlement, and take like 1/3 of the money.
posted by The_Vegetables at 7:56 AM on October 4
posted by The_Vegetables at 7:56 AM on October 4
My experience in the past was that the insurance offer was enough to go out and buy, without much haggling, an equivalent car to the one that was wrecked. And that offer took the trim and mileage into account and assumed that the spare tire, etc. stayed with the car. If you're not getting an offer that's reasonable (and honestly even if you are) I would start gathering info about what a fair offer would be. If you can show a list of comparable vehicles for sale in your area that are all way above the offer, that will strengthen your position.
The liability of someone who hits your car is to make you whole for the object that was damaged. They're not required to fix any financial agreements you had in place to borrow money to pay for the object. One more reason to drive a car one can easily afford, I suppose. It's true that as car loans stretch longer, it is more likely that the someone is actually underwater or close to it. Though 4 years isn't particularly long these days (you can get 7 year loans that are immensely costly in the long run but do shave a few bucks off the monthly payment) it's long enough to be in a marginal situation. Sorry.
posted by wnissen at 9:56 AM on October 4
The liability of someone who hits your car is to make you whole for the object that was damaged. They're not required to fix any financial agreements you had in place to borrow money to pay for the object. One more reason to drive a car one can easily afford, I suppose. It's true that as car loans stretch longer, it is more likely that the someone is actually underwater or close to it. Though 4 years isn't particularly long these days (you can get 7 year loans that are immensely costly in the long run but do shave a few bucks off the monthly payment) it's long enough to be in a marginal situation. Sorry.
posted by wnissen at 9:56 AM on October 4
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posted by forthright at 1:22 PM on October 3 [5 favorites]