Car Accident: What Happens If I’m Upside Down on My Loan?
Hey everyone, today I was involved in a car accident, and I’m concerned about my situation. I currently owe more on my loan than the car is worth, and I’m worried about the leftover balance I’ll have after the accident. I’m not looking to buy another car, especially since I live in an area where a car isn’t necessary, and frankly, I can’t afford one right now. The damage to my car is about 99% totalled. Any advice would be greatly appreciated!
I’m really sorry to hear about your accident; that’s a tough situation to be in. If your car is considered a total loss and you’re upside down on your loan (meaning you owe more than the car’s current value), it can get a bit complicated.
Typically, your insurance will pay out the current market value of the car, which might not cover the remaining balance on your loan. If there’s a gap, you’ll still be responsible for paying that balance unless you have gap insurance—which specifically covers the difference between the car’s value and what you owe.
Since you mentioned that you don’t plan on buying another car, you might want to contact your lender to discuss your options. They may be able to work with you on a payment plan or other solutions to help manage the remaining balance.
In the meantime, if you haven’t already, file a claim with your insurance company as soon as possible. They will guide you through the next steps based on your coverage. If you have any additional questions, feel free to ask!