My Car Was Totaled, But I Still Owe Money On It

Many Americans carry a loan payment on their vehicle. This can present some unique challenges if you are in an accident and your vehicle is totaled. While your insurance company is required to replace the value of your vehicle, as long as you had full-coverage, they are not required to pay off your loan.

What Does an Upside-Down Loan Mean?

Upside-down is a phrase that is often used to describe a house that has a higher amount owed on it than what it is currently worth. The same thing can happen with a vehicle.

Tips to Avoid an Upside-Down Vehicle Value

Any time you are upside down with your vehicle to loan ratio, you are at risk of paying for a vehicle that you no longer have or can drive. For this reason, it is best to avoid an upside-down value when possible. These tips will help you maintain an equal value on your vehicle:

  • Know the value of your vehicle: Paying more for a vehicle than it is worth is one of the most common ways to become upside-down on your loan.
  • Make extra payments: Making extra payments toward your loan will help you pay down the balance faster.
  • Make a large down payment: Making a large down payment when you buy your car will also help you get ahead.
  • Price shop interest rates: High-interest rates mean that you pay more in interest. This means that more of your monthly payments are actually going to interest versus the loan.

Being smart about your purchase will help you avoid a loan that you cannot pay off in the event that your car is totaled.

How Does the Insurance Company Value Your Car?

After you report a car accident to your insurance company and the service shop claims it as a total, they will begin the process of valuing your vehicle. Your insurance adjuster will look at things like:

  • The condition of the vehicle
  • The age of the vehicle
  • Mileage on the vehicle
  • Vehicle’s history of maintenance

The adjuster will also compare the vehicle to recently sold cars in a similar condition, basing it on the condition of the vehicle prior to the accident. Additionally, if the vehicle has been in previous accidents, this will also decrease the total value.

One of the most common mistakes that drivers make is accepting the first value offer. If you have evidence that your vehicle was actually worth more prior to the accident, you can present this to the insurance company and request an updated offer.

It can be helpful to work with a lawyer during this process, especially if you cannot come to an agreement. You may have to take the insurance company to court to achieve a fair value. The valuation of the vehicle will also determine whether it is considered a total loss. A vehicle that is valued at a minimum of 70% of the vehicle’s total will usually be totaled.

Contact a Clifton Car Accident Lawyer to Discuss Your Case in New Jersey

Was your vehicle recently totaled out due to a car accident in New Jersey? Don’t wait for the negligent party or their insurance company to do the right thing. Right now, you need an aggressive personal injury attorney on your side, fighting to get you the compensation you need, want, and deserve. The skilled attorneys at Silverman and Roedel, LLC represent clients injured because of a car accident in Paterson, Clifton, Passaic, Wayne, and throughout New Jersey. Call (973) 772-6411 or fill out our online contact form to schedule a free consultation about your case. We have an office conveniently located at 1187 Main Avenue, Suite 2C, Clifton, NJ 07011.

The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.