How to Negotiate With the Lender of a Totaled Vehicle

If your vehicle was worth less than you owed to your lender when it was declared a loss, you're responsible for the total balance due on the loan unless you have gap insurance. Gap insurance pays for the remaining loan balance when your insurance company does not. Otherwise, you can ask your lender to decrease your pay back amount, although some lenders will only compromise if you can pay the entire balance at once. Otherwise, negotiate a more affordable payment plan.

Instructions

1

Review your purchase paperwork before calling your lender. Find out if you purchased gap insurance without knowing it, as some lenders, insurance companies or dealers include gap insurance in a policy, lease or loan. Submit a claim to your gap insurance provider to pay off the remaining balance if you find you have it.

2

Examine your finances and determine if you can pay the total balance of your loan. Consider borrowing the amount from a friend or family member. This way, your credit report will state a satisfied loan balance and you can avoid interest payments.

3

Call your lender and explain your situation. Ask the lender to decrease your balance. If the lender refuses, ask if you can obtain a discount by paying the amount in full.

4

Pay the negotiated amount if your lender agreed to accept the lower payoff amount. If the lender still refuses, ask to rearrange your monthly payment amount and term. Otherwise, you'll pay your full payment every month until you satisfy the balance.

5

Sign a contract with your lender that reflects your new payment amount and term; don't accept a verbal agreement.