Insurance Company Hasn't Offered Enough for Car
Q: The money the insurance company has given me for my vehicle will not completely pay off my car loan. What is going on?
A: Sometimes, an auto loan balance is more than the fair market value of a car. This can happen when the person who gets into an accident has a brand new car financed for the entire purchase price. Particularly with luxury vehicles, the fair market value diminishes immediately after driving off the sales lot! The carrier, in those circumstances, sometimes doesn't pay off the whole loan (because the market value of the vehicle is less than the balance of the loan), and the vehicle owner can end up still owing on the loan for a car they can no longer drive! If potentially at risk for such a situation, you may consider "gap insurance" to cover this difference. Talk to your insurance representative about this, particularly if you're thinking of purchasing a brand new vehicle with little or no money down.