Here’s the bad news: if you have a loan or lease out on a totaled car, you’re still responsible for paying off the remaining balance. Usually, the insurer pays the lender or leaseholder first and gives you the rest of the settlement money if there’s any leftover.

What does repossession status mean?

Repossession is when an auto lender takes possession of your vehicle, sometimes without warning you in advance or having permission from the court.

If your car is totaled and you still owe money on the loan, the insurance company will pay your lender for the car’s value, and you will be responsible for any remaining balance if the check is less than the loan amount.

Do I have to pay taxes on a totaled car?

Insurer must pay sales tax in addition to the fair market value of the totaled vehicle. This is necessary for the insured to be “made whole” for the loss. Sales tax must be paid at the time of compensating the insured for the loss of the vehicle.

Does Gap Insurance always pay out?

Gap insurance does not pay when a car needs normal repairs, when a car is damaged but not declared a total loss, or when a driver does not make the necessary payments. Gap insurance only pays when a car is totaled and there is a difference between the lease or loan balance and the car’s value.

Does the insurance company send me a check?

Once your car insurance claim has been approved after an accident, your insurer will issue a check to pay for the repairs.

Do you still owe a balance on your auto loan?

Often people owe more on their loans than their vehicles are worth. If you still owe a balance on your auto loan after your settlement proceeds are paid to your lender, you would owe this amount and should make payment arrangements with your lender.

What happens if you sell your car for more than what you owe?

Car Equity: If Your Car Is Worth More Than What You Owe Your car may be worth more than what you owe on the loan. This is what is known as having equity in the car. If your car sells for more than what you owe, you won’t have to pay the lender any more money and will get funds back from the excess amounts the car sold for.

Do you owe more on your car loan than the value of the car?

Add to those longer loans with how quickly a car depreciates, and you see why consumers may owe more on their car loans than what the vehicle is actually worth. If your vehicle is totaled and you still owe more than it’s worth, your car insurance company will pay only actual cash value (ACV) for your vehicle.

Do you still owe your auto loan if your car is totaled?

That is because vehicle values depreciate instead of increase in value. Often people owe more on their loans than their vehicles are worth. If you still owe a balance on your auto loan after your settlement proceeds are paid to your lender, you would owe this amount and should make payment arrangements with your lender.