A total loss claim is a major calamity, but an Auto Insurance in South Austin TX company understands it when it happens. A total loss is usually relevant for older vehicles where the actual value of the vehicle is comparably lower. But, it can absolutely occur with a vehicle that is only a year or two old. Flooding from seawater will cause a vehicle to be totaled if it is only a day old. What can the insured do to lose the least amount in what is conceived as a total loss?
Firstly, the Auto Insurance in South Austin TX company can only do so much. They will cover the costs of the vehicle’s value. They will not cover the entire loan. A gap insurance feature will cover the remaining balance of a loan if it is present. This will clear a loan. The insurance company will do one of two things. They will write a check for the value of the vehicle after an inspection on it’s condition. The check will be written to either the insured or the finance company. It will depend on the total loan value. If a driver is upside down, it is almost certain the check will go to the bank. The insured can request the check be written to them, and they can do what they please with the funds. But, the loan amount is still owed. To lose the least, it may be recommended to allow the full funds to go towards the loan. Having hanging debt could be counter-intuitive, and it may be best to just allow the financier to have it for the loan as opposed to taking it for other purposes.
Obviously, a new car is probably needed. A great way to approach this scenario when the insured is upside down is to downgrade the total loan. Get a new loan with the rolled over amount, but keep it lower than what the previous loan was at. This will diminish the car payments and avoid paying for an “empty loan” (a car that is no longer present). Speak to Patrick Court of State Farm for more on total loss damage.
