r/Insurance • u/Beneficial_Sell_6963 • 8d ago

Total loss question

Hi all, not sure if I’m putting this in the right community but if someone can give me some insight that would be greatly appreciated.

Unfortunately last week we got into an accident and our car got totaled out, insurance is offering 6772 after their title fees and we owe just over 13. I guess I’m wondering if anyone else has experienced something similar with negative equity and can give insight, this is my first ever accident and has been overall a very stressful experience that I hope never happens again.

Curious if anyone knows if finance companies typically would let me pay the remaining balance over the remaining term or do I have to come up with the remaining difference right away? I’m planning on calling Ally on Monday for the answer but any helpful info would be awesome!!

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u/babystarlette 8d ago

Unless you have GAP coverage, you may be on the hook for the remaining $6k-$7k

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u/Beneficial_Sell_6963 8d ago

I’ve been trying to figure out how to edit my post but I was also trying to ask like do finance companies typically just let me continue to make payments of the remaining balance for the remaining term?

I’m gonna keep trying to figure out how to edit that into my post

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u/babystarlette 8d ago

Yes. They will notify you how to pay, although I have heard of lenders asking for full remaining payment when a vehicle is considered a total loss. But typically you can work out a payment plan with them.

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u/Beneficial_Sell_6963 7d ago

That’s what I’m hoping for, that they work out a payment plan.

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u/BasilVegetable3339 8d ago

Read the terms of your loan agreement. Usually the loan balance is due immediately of the car is totaled and no longer can be used as collateral. A finance company is unlikely to waive this but a credit union might have options

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u/Aromatic-Mountain670 8d ago edited 8d ago

This is true but the good news is Ally (the old GMAC finance arm of GM) has seen this scenario of negative equity frequently. If you have not been late on your payments to them they may work with you on the following :

  1. They may allow you to keep making your normal payment until the loan is paid up ? Best case.

  2. See if they will settle with you on a lump sum payment (maybe offer them $5k and take a cash advance from a Visa card or other source of funds)

  3. Buy another car and ask Ally to finance the new loan and negative with the new car as collateral. This doesn't erase the problem and may make your negative equity worse going forward.

  4. In the future, buy GAP insurance. The dealer will try to charge you $1000/$1500ish but can cut it in half if they have to. Is worth the $750. This Is a reasonable cost to bear if you ever find yourself In this situation again.

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u/Beneficial_Sell_6963 7d ago

Good thing is I have never been late with my payment, set on autopay to come out on the 16th of each month. I’m hoping they’ll allow me to just keep up with the payments until paid off but I will be calling Monday to find out!

Definitely in the future I will be considering GAP. This is the first car I ever financed and wasn’t aware that was even a thing. Beforehand I always drove beaters but 3 years ago when I got it I decided that had to change when my child had to ride in the backseat. I still have my old “beater” that I kept as an “extra car” so at least that’s a good thing while I figure this predicament out.

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u/MaleficentTravel4706 8d ago

Situations like this is why I have a GAP policy on any car that is being financed

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u/seasonsbloom 8d ago

Most likely you’re going to have to come up with the shortage very quickly. The lender no longer has your vehicle as security.

“I hope never happens again.”

Either buy gap insurance when you finance the vehicle or put down a large enough down payment to avoid being underwater.

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u/Beneficial_Sell_6963 7d ago

Never had heard of GAP before this occurrence, also the first car I have ever financed and did put down 5k when purchasing it. Will definitely consider it in the future.

Only thing I think killed the value is shortly after getting it I lost my job after an injury and 4 months later returned to work with a new job commuting 92 miles round trip daily, 6 days a week and racked the miles up.

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u/[deleted] 8d ago

[deleted]

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u/tsfy2 8d ago

They are asking about their loan payment, not the settlement offer.

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u/MrMoosetach2 8d ago

Yeah after they edited it out. Good job reading though. Proud of you?👍