Total Loss

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When your vehicle is declared a “total loss” but you still have to make car payments on the vehicle

If your car crash resulted in totaling your vehicle and your car was financed, you still might have car payments to make on your totaled vehicle. Under the law, you are still legally responsible for the balance owed on your auto loan.

This can seem terribly unfair. However, there may be a way around your predicament:  

Substitute the equity from the old car and buy a used one of similar or lesser value. You’ll first need to ask the bank on your old car loan to accept the newly purchased one as collateral for the old loan. Be careful to make sure that your purchase of the used car is near or below the amount of the old collateral. All parties must be involved and approve the transaction, including your insurance company, the used car dealer, and the loan company. While this may sound complicated, most experienced used car dealers know how to manage these transactions.

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