Question on totaling\payout (stupid question)

[MrA79]

Ok, so I'm still hoping the damage to my car doesn't warrant a total loss. But having never been in this situation, I was curious - if it IS totalled, does the insurance company cut the check to me or just pay off the balance with the lien holder? IE could I just take the payoff check and buy something new with cash while still making my old car note payments? Thanks!

 

[postmark]

Ok, so I'm still hoping the damage to my car doesn't warrant a total loss. But having never been in this situation, I was curious - if it IS totalled, does the insurance company cut the check to me or just pay off the balance with the lien holder? IE could I just take the payoff check and buy something new with cash while still making my old car note payments? Thanks!

While I've never had this happen I can't imagine a lender allowing you to have a car loan without the collateral of the actual car. So I would guess that the lender is going to want payment immediately.

 

[slag]

If there is a lein on the title, the check will get cut to both you and the bank and you will be responsible for paying off the rest of the vehicle if you are upside down on the loan. This is why it is important to have gap insurance. Doesn't sound like this is your problem though.

http://cars.about.com/od/buyingadvice/a/gap_insurance.htm

But yes, you will have to pay off the car as the insurance company will need the title to sell to one of their salvage companies and won't be able to get it until the lein is removed.

 

[MrA79]

Yep, I have gap insurance so I'm not worried about ending up underwater on it. Just sort of musing out loud and getting opinions. Appreciate it.