Written by attorney David Phillip Folkenflik

If My Car is a Total Loss Do I Still Have to Make My Car Payments?

Let's say you are in a car accident and your car is a total loss (totaled). You have been injured in the crash, but your injuries are relatively minor, and you will not have to miss time from work. Let's also assume that there is some delay in getting payment from insurance (either the at-fault carrier or your own collision coverage if you have it). These sorts of delays, sometimes for up to 30 or 60 days are quite common as investigations are conducted and fault is determined.

Now, because your car has been totaled and you can't drive it, but you need it to get to work, to pick up the kids, to get to your doctor appointments, etc., you've also had to rent a car (let's assume you, like many others did not purchased "rental car coverage").

Okay, so you don't have enough money (or maybe even credit) to just go buy a new car until your current one is paid off. Plus, you are spending a fortune on a rental, but what else can you do? If you can't get to work you will lose your job, and who else will pick up the kids and get you to your doctor appointments?

Now, here's the kicker; you have a car payment due for the car you can't even drive because it's totaled! So the question is: Do you still need to pay your car payment? Unfortunately, the answer is "yes, your payment is still due".

The reality of this is that your finance company is not required to wait for insurance to pay off your totaled car. Your payments will continue to be due, and if you don't pay them, you risk penalties, interest, repossession, legal judgments against you, and serious damage to your credit rating. So, it's best to keep making payments until the car is paid off in full. The insurance company owes the amount of the car's value at the time of the crash. So, keep in mind that may or may not be enough to pay it off anyway, and you may owe additional sums if you are "upside down" in the car value wise.

In my experience, some finance companies will often give you an extra week or even a few if you contact them before your payment is late and explain the situation to them, but keep in mind they don't have to do that. I have also found that, if you have a accident & injury lawyer working on your injury case, your finance company may be willing to relax their collection efforts a little bit with assurances of future payment given on your behalf by your personal injury attorney (Basically, through a "Letter of Protection"). But, again, they don't have to wait.

So, what I tell my clients is to keep making payments until the totaled car is paid off. Some do and some don't. If they don't have the money to pay for it, then they don't, but they also accept the potential consequences for not doing so.

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