How Much is My Totaled Car Worth?

Well, the answer is “it depends”. Not on how much you paid for the car, or how much you still owe on the car, but on the value of the car immediately before the wreck as compared to its value immediately following the wreck. The amount left on your car note is irrelevant.

Example: You drive a 2004 Nissan Maxima. You bought (financed) the car in 2007 for $15,000. Over the last 2 years you have made $6,000 worth of monthly payments. This leaves you owing $9,000. Yesterday, you were t-boned and the damage to the car makes it a total loss. This means it would cost more to repair the car than it’s worth. Why then, if you still owe $9,000 on the car, is the other driver’s insurance only willing to give you $7,500 for the total loss? The short answer is that although YOU may still owe $9,000 for the car, at the time of the wreck a five year old Maxima (same make and model, same mileage, same features) had a market value of only $7,500. They are not obligated to pay off the car for you, so that means you will still owe $1,500 on the note. They should, however, also pay you for the sales tax you would incur to buy another vehicle of equal fair market value and the cost of license and registration. You must still make your payments, or make one lump sum payment to the finance company to satisfy your obligation.

All this means is “YES”, you can be an innocent victim of someone else’s negligence, and still be responsible for paying off your car note. The lesson here is to make sure you negotiate a fair price for your vehicle (according to make, model, mileage and features), and to carry adequate collision coverage on your own policy.

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