What happens if you destroy a financed car?
Asked by: Gustave Ankunding | Last update: June 9, 2025Score: 4.1/5 (50 votes)
What happens when you damage a financed car?
If you owe money on a car loan and damage your car, the check for the repairs typically goes to both you and the lienholder (the entity that loaned you the money for the car, often a bank or finance company). This is because the lienholder has a financial interest in the vehicle until the loan is fully repaid.
What happens if you want to get rid of a financed car?
You could sell the car, or you could allow them to sell the car for you (through repossession) but you will likely take a loss either way. They are going to expect you to fulfill the obligations of the contract. Failure to do so usually results in negative reporting to credit bureaus and possibly suits in court.
What happens if I finance a car and it breaks down?
If your car breaks down and needs repairs before it's fully paid off, you're still responsible for making your regular payments. The terms of your loan or financing agreement usually continue as agreed, regardless of the vehicle's condition.
What happens if you wreck a financed car without insurance?
What happens if you total a financed car with no coverage? If you're uninsured and facing a total loss on your car, you will have to pay the whole balance of the loan yourself. And if you are at fault, you may be responsible for paying for the other party's damages or injuries.
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What happens when your car is totaled and not paid off?
What happens if my vehicle is totaled with a remaining loan balance? Your insurance company will pay off your remaining balance, and the remaining equity goes back to you.
Will Gap insurance pay off my loan?
When you file a qualifying claim, your comprehensive or collision coverage will pay the actual cash value (ACV) of your vehicle, minus your deductible. Your gap coverage may then pay the difference between your vehicle's ACV and the outstanding balance of your loan or lease.
Can you return a damaged financed car?
Most of the time, unfortunately, you can't return a financed car. Although there are a few scenarios where it may be possible (more on that below), they are few and far between.
Can I trade in a financed car with a blown engine?
Trade In Car With Bad Engine
Most local dealers will give you very low trade-in values on a car with damage, and much lower if it isn't running. Since used car dealers sell cars in pristine condition, they will have to sink large amounts of money in order to flip your car.
Will insurance cover a broke down car?
Car breaks down: Whether you're on a road trip or headed to work, car insurance doesn't typically cover breakdowns not related to covered accidents. However, your car warranty may provide coverage for certain parts for a set timeframe, or you can purchase more comprehensive mechanical breakdown insurance.
How to get rid of a car you can't afford anymore?
Trade In or Sell Your Vehicle
If you need more than just short-term relief and refinancing isn't an option, it might be worth it to get rid of the car. You could either trade it in to a dealership or sell it to a private party and buy a used vehicle.
What happens if the repo man never finds your car?
What Happens If the Repo Agent Doesn't Find Your Car? But if you make it hard for the repo agent to get it, then the creditor may use another method to get the car back, called "replevin." Replevin can be just as costly as a repossession, if not more so.
Can I return a financed car if I can't afford it?
If you simply can't afford your car payments any longer, you could ask the dealer to agree to voluntary repossession. In this scenario, you tell the lender you can no longer make payments ask them to take the car back. You hand over the keys and you may also have to hand over money to make up the value of the loan.
Will a dealership buy my car if it has damage?
In short, yes, you can trade in a car with body damage. However, whether it's the most beneficial move for you financially depends on several factors, including the extent of the damage, your car's overall condition, and the trade-in offer from the dealership. Always do your homework before you make this decision.
Can a dealership take back a financed car?
California Car Dealers are allowed to Cancel Your Contract within 10 Days and demand the car they sold you back, but they: CANNOT Keep your down payment or your trade in. CANNOT Make you sign any other contact, regardless of the changes without your consent. CANNOT Force you to increase your down payment.
Will a dealership take a totaled car?
Can You Trade In A Totaled Car To A Dealership? Many dealerships would be very reluctant to accept a vehicle with a salvage title. If they do accept it, chances are they'll provide an extremely low trade-in value for the car, since they cannot easily put it back on the lot to sell to someone else.
What happens if my engine blew up and I still owe money?
In this case, you'll have to pay the outstanding difference. You'll also have to be prepared for a lower trade-in value since the engine failure will have devalued your car.
What to do if you bought a car with a bad engine?
You'll have options if the vehicle did come with a warranty. Try going back to the used car lot to see if they'll fix the problem. If you bought the vehicle as is outlined above, you don't have much recourse other than to look at your state's lemon laws if applicable or contact your state's attorney general office.
Does insurance cover a blown engine?
Whether it's routine maintenance, a mechanical failure or a blown engine, car insurance will most likely not cover the costs of repairing or replacing your vehicle. Hopefully, your car keeps running smoothly, but plan to pay out of pocket for routine maintenance or for a mechanic if your car breaks down.
Can I trade in a financed car that's damaged?
Can you trade in a car with damage if it needs major repairs? Yes. But in this case, it's not worth it to fix the vehicle if the repairs are costly.
What if I don't want my financed car anymore?
One way to get out of a car loan is to sell the vehicle privately. If you're not upside down on the loan, meaning the car is more valuable than what you currently owe on it, you can use the proceeds of the sale to pay off the current loan in full. Another term for an upside-down car loan is negative equity.
What is the penalty for returning a financed car?
Voluntary return is just calling the finance department and telling them you're not going to pay. It just lets them know it's gonna be an easy repo...which brings us to... It's still repossession. They will sell the car at auction for pennies on the dollar and you will owe any remaining balance.
How much money do you get back from gap insurance?
You'll only receive a refund for the GAP insurance that you haven't used. For example, if you cancel your policy after three months of coverage, you'll only get a refund for the remaining nine months (if you paid for a year of coverage). The amount of your refund is based on how you pay your insurance bill.
Will my insurance pay off my loan?
Your total-loss insurance payout will be for your car's ACV only. If you owe more money on your loan than your insurance settlement, you are still responsible for paying the difference. Most insurers offer "gap" coverage, which pays the difference between your car's AVC and your loan balance.
Will gap insurance cover a blown engine?
GAP insurance does not apply in the event of engine failure, mechanical malfunctions, owner death, or in cases where extended warranty coverage conflicts.