Here’s What Happens if You Crash a Financed Car
Car Accident - October 18, 2022
Even when car accidents don’t result in injuries, they can still turn out to be extremely expensive. But what about when you still owed money on your car before the accident?
If you financed your car, that essentially means that you don’t fully own your car. There are a few scenarios that warrant different outcomes. It mostly depends on how much damage was done to the car and how much you still owe.
Let’s talk about a few scenarios below.
Scenario 1: You’re at Fault
If you are at fault for the accident, then it is your responsibility to pay for the damage to your car.
Depending on your insurance policy, your insurance company may cover the damage to the car, but this is not always the case.
Here’s the tough pill to swallow: the value of your car dropped the moment you were in an accident. However, that doesn’t mean you’ll get to pay less on your car payments. Instead, you will be paying payments on the car’s original value, which means you are paying for a car with a higher value than the one you own.
But all hope is not lost – an experienced car accident attorney from Horwitz, Horwitz & Associates can take a look at your situation and see if you have a case. Many people let the opportunity to recover financial compensation pass them by simply because they believe they don’t have a case or don’t even consider hiring an attorney.
Car accident bills can be overwhelming, and it’s always worth it to at least consider litigation. Auto insurance companies low-ball people with offers all day long, and many unsuspecting drivers fall for their offers because they don’t know any better.
A lawyer can help prevent that from happening to you.
Scenario 2: The Other Driver Is at Fault
If you were in an accident in your financed car and the other driver was at fault, their insurance company may cover the damage to your vehicle. You may also receive some sort of payment for the diminution of the value of the car.
However, all of this depends upon the type of insurance policy that the other driver has. Even if they have a policy that covers your damages, the insurance settlement offered to you may be a low-ball offer.
You might be thinking, “What if we were both at fault?” and that doesn’t mean receiving compensation is out of the question. Illinois operates under a modified comparative negligence system, which means that a victim can recover damages as long as they are less than 50% at fault.
This means that as long as you were less than half responsible for the accident, then you may be able to recover payment. If you can prove that you were only 40% responsible for the accident, for example, then you may be able to receive compensation for the 60% that was caused by the other driver.
Scenario 3: It’s a “Total Loss”
If the accident resulted in your vehicle being deemed a “total loss” (often referred to as a “totaled” car), that means that the amount that it would cost to repair your car exceeds the value of how much the car is worth.
For example, if your car was worth $10,000 and the damages to your car will cost $11,000 to fix, that would be considered a total loss.
If your car is deemed a total loss, you may not receive enough money from insurance and may end up still being responsible for your car loans.
This is a tricky situation that calls for a lawyer. If the offer from the insurance company falls short of how much you owe on the car, a car accident attorney can help you fight to recover the damages to pay it off.
Scenario 4: You Have Gap Insurance
If you are asking what happens if you crash a financed car, the answer will likely sound a little better if you have gap insurance.
Gap insurance is essentially insurance that covers the “gap” or difference between the current value of your car and the amount that you still owe on the value you purchased it for. The moment the car is purchased, it becomes a “used car”, which decreases its worth. Most insurance companies will insure your car at its current value, but if you have gap insurance, your car will be insured at the value that you actually owe on it. You may be able to purchase gap insurance through the car dealer when purchasing your car, or you may be able to add it to your auto insurance policy.
Gap insurance is a great option for people who made a down payment of less than 20% of the purchase value of their car, people who financed their car for longer than five years, or people who leased their car.
These are just a few examples of situations that can make gap insurance advantageous, but it is always worth looking into to see if it might be a good choice for you.
Was your financed car damaged or totaled? Call Us.
If you crashed your financed car and it is damaged or totaled, you might have the added stress of wondering what that will mean for the money you owe on your loan. If you are in this position, a Chicago car accident attorney can help.
Call Horwitz, Horwitz & Associates and let us help you. The Horwitz family has been helping clients in Illinois since 1924. We have recovered millions of dollars for our clients, and we help win cases for many people who have previously been told that they have no case.
With a large team of 19 attorneys, we are well-equipped to take and prioritize your case the way it should be prioritized. It is our passion to fight for the people of Illinois who have been in accidents. We have your back.
If you were in an accident and aren’t sure what to do next, call us at (800) 985-1819. Your first case consultation will always be free. Don’t wait, reach out to us today!