Skip to main content

Are you a legal professional? Visit our professional site

Please enter a legal issue and/or a location
Begin typing to search, use arrow keys to navigate, use enter to select

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

If your car was totaled, but you still owe money on it, you'll need to closely examine your insurer's settlement offer. Insurers are obligated to compensate you for the value of the vehicle you lost. They do not have to pay enough to purchase a replacement or to cover the amount of the loan outstanding on your wreck.

Many people have heard stories about someone being "upside down" on their house, meaning they owe more on their loan than the value of the house if they sold it. Did you know that the same thing can happen with a car? The following article provides some insight into how to deal with car accident settlements with an outstanding car loan.

Valuing Crashed Cars

The value placed on your car is central to the problem of a totaled car for which you still owe money. An insurance adjuster will set a value on the damaged vehicle following the accident. This value is based on the condition of the vehicle just prior to the accident.

All cars depreciate in value over time and through use. Both the age and the mileage on a vehicle affect its value. The car's history of maintenance, repair, and parts replacement can all affect the car's value as well.

New tires, for example, increase the value of a vehicle. Generally, however, even a car that undergoes its regular maintenance and is in great working condition will depreciate in value. A prior accident reduces a vehicle's value as well.

The insurance adjuster looks at various aspects of the car's history. That information helps them come up with car's calculated value to include in the settlement offer following an accident.

Offers and Counteroffers

When you receive an offer from the insurer, you should remember that your car loan obligations are not impacted by the vehicle's destruction. You should also look carefully at the vehicle's valuation. If the valuation is fair, you are unlikely to receive a better offer. Accepting the offer also bars you from suing later.

On the other hand, if you have information that would support a larger value on the vehicle, you can try again. You can submit a counteroffer along with any evidence you have to support your position for a higher valuation. Look for other listings similar to your vehicle with higher prices to help support your argument for a higher offer.

Many of these exchanges may take place before reaching a final settlement. If you and the insurer cannot agree, you will need to sue them in civil court. One important consideration in negotiations involves your state's "statute of limitations" on civil suits.

Each state sets a deadline by which a lawsuit must be filed or the right to sue is lost. You should be aware of your state's statute of limitations because negotiating a settlement is nearly impossible once the right to sue has been lost.

Is it a Total Loss?

One interesting aspect of valuation is that it impacts whether a vehicle is considered a total loss. Each insurer sets a percentage of the total value, beyond which a car is considered a total loss. Many states set the minimum percentage permitted, often around 70 percent. Individual insurers may have total loss percentages higher than the state minimum.

If you are able to argue for a higher value for your vehicle and the cost of repair does not change, then it is possible that you may be able to reduce the percentage such that the insurer is required to repair your car.

Get Attorney Assistance for Your Claim

There are a lot of important considerations when your car is totaled and you still owe money on it. Professional assistance can help clarify your rights and help you determine the best way to proceed. Contact a qualified local attorney to learn more about how they can help protect your interests after an accident.

You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help

Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.

Or contact an attorney near you:

Next Steps

Contact a qualified auto accident attorney to make sure your rights are protected.

Begin typing to search, use arrow keys to navigate, use enter to select

Help Me Find a Do-It-Yourself Solution

Copied to clipboard

Find a Lawyer

More Options