Does Gap Insurance Cover a Total Loss of My Vehicle Under Full Coverage Insurance

Gap insurance is separate from a full-coverage insurance policy. Although you may purchase gap insurance from your car insurance provider, it pays out for your vehicle's loss differently than a full-coverage insurance policy. To determine whether you should purchase gap insurance or if it will cover your loss, consider its purpose and the terms of coverage.

Full-Coverage Insurance

Full-coverage insurance pays for repairs to your vehicle or for its market value if it is determined a loss by your insurance company, or when repairs exceed the car's market value. When you have a loan on your car, you are required to carry a full-coverage insurance policy. If you experience a total loss, your market-value payout goes to your lender without consideration of your loan balance. If the insurance payout is more than your loan balance, your lender will return the excess payment to you. If you owe more than the car's value, you are responsible for satisfying the balance still due on your loan.

Purpose of Gap Insurance

If your market value payout does not satisfy your loan, gap insurance pays your remaining loan balance so you don't have to. You usually have one opportunity to purchase the policy, which is at the time you purchase your car. Purchase the policy only if you are upside-down in your car loan, meaning you owe more to your lender or leasing bank than the vehicle's market value. You do not receive any money back from a gap insurance policy if you do not use it.

Warning

Gap insurance will pay off your loan balance as long as you abide by your contract. Read your gap insurance contract to make sure you are covered for a total loss. For example, you might find that you'll lose your gap insurance benefits if your full-coverage insurance policy lapses or cancels. If you have let your full-coverage policy expire or decreased your policy coverage, you aren't likely to obtain gap insurance coverage.

Paying Off Your Lender

If you did not abide by the terms of your gap insurance policy and it does not pay off the remaining balance of your loan, you must pay your lender yourself. As stated in your loan contract, you are responsible for the balance due on your loan, whether you have your car or not. Make arrangements with your lender to continue making car payments until your loan is satisfied. Otherwise, your non-payment is reported to the credit bureaus, which negatively affects your credit rating.

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Can I Transfer a Car Title If I Owe Fees?

When you sell or donate a car, the buyer takes full ownership of the vehicle and title. If you happen to owe certain fees related to the vehicle as the current owner, this is a matter of concern for both you and the prospective buyer. Often, the agencies who issue these car-related fees suspect that it will be difficult to collect after the driver has transferred ownership of the car to another individual.

Title Transfer Process

Transferring a title is usually a simple matter of signing it and giving it to the new owner. The new owner must then submit the title, bill of sale and new registration paperwork to the state department of motor vehicles to officially transfer ownership into his name.

Types of Fees

The most common type of fee that may be associated with a vehicle is an unpaid parking ticket. The ticketing agent commonly writes the car's vehicle identification number, or VIN, and description on the ticket. Ticketing agents may also write information from the car's registration sticker, if applicable, on the ticket. In certain cases, a ticket due to a moving violation, such as a speeding violation, may also include identifying information about the car, as well as the individual owner.

The License Plate

Though these car-related fees may include data regarding the vehicle, they're commonly associated with the registered license-plate number, so the fee is issued to the registered individual rather than the car. However, it's important for you to send your plates into the department of motor vehicles as soon as possible to avoid issues. Confusion may occur if the department of motor vehicles believes that you're still in possession of the vehicle, and thus responsible for new fees related to the vehicle. Also, if you use the same plates on another car, you must contact the department of motor vehicles to officially record the transfer.

Considerations

You can usually transfer the vehicle title successfully if you owe fees related to the car. However, there are state-specific exceptions to this rule. In Hawaii, for example, the buyer is responsible for covering parking tickets related to the car if you don't do so before transferring ownership. If the new owner runs into problems registering the car, be prepared to help resolve those issues as the seller. Also, before you assume that the car is clear of all fees, contact the department of motor vehicles and pay for a full vehicle history report. Contact your local parking authority as well to see if you owe any outstanding tickets associated with that VIN.

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How to Sell Classic Automobiles

If you have a classic automobile that you no longer want to keep, you can sell the classic auto to another collector or enthusiast. Selling a classic auto does not differ much from selling a regular vehicle. The main difference is that classic autos typically are higher in value than regular cars. As a result, the differences in selling relate only to the value of the vehicle. Selling a classic auto is something that you can do on your own.

Instructions

1

Consult a professional classic car appraiser to get an appraisal on you classic auto before you attempt to sell it. This gives you a good idea of the worth of the vehicle. Make sure to get a written appraisal so that you can show it to any potential buyers.

2

Look at some popular classic car selling websites, such as Classic Cars and AutoTrader Classics (see Resource section), to see how other sellers are pricing similar classic autos. You can also look in your local newspaper's classified ads.

3

Create an account with an escrow service, such as Escrow.com (see Resource section), for accepting payment for your vehicle sale. Typically, there is no charge to create an escrow account, but there is a commission fee that ranges between one and four percent. Using escrow is a way to ensure payment, but it is not necessary.

4

Take good photos of the classic auto from a variety of angles so that it looks attractive to potential buyers.

5

Post an ad listing your car for sale in popular classic auto sales places, such as the Classic Cars and AutoTrader Classics websites (see Resource section). You can also post an ad in the local newspaper. Alternatively, you can take the car to the some classic auto shows and put a "for sale" sign on it. Prices for posting an ad vary.

6

Sign over the title to the new buyer only after you have received payment in full. If you are selling the car to someone that is a long distance away, have the buyer sign a document that states you are not liable for any damage done to the vehicle while it is in the care of a transport company.

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The Process of Repossessing a Vehicle on a Delinquent Account

Experiencing a vehicle repossession is embarrassing and losing your car to a repossession can have a negative effect on your credit score and possibly stop future auto loan approvals. If an auto lender threatens repossession, it's imperative to understand how the process works and then attempt to avoid losing your car.

What is Repossession?

A car repossession occurs after you stop making your auto loan payment. Auto lenders vary; some may repossess your car after you've missed a couple of payments, whereas other lenders may delay the process for a few months allowing you time to get your loan on track. Buying a car and signing loan documents indicates your willingness to pay back funds borrowed from your lender. Being delinquent on a car payment breaches this contract and lenders have the legal right to take back or reclaim the vehicle.

Notification

Rarely will a lender show up to repossess a vehicle without first sending notification. Lenders typically begin contacting borrowers once payments are late by telephone or letter. If a borrower ignores these letters, lenders then send a notification alerting borrowers to the possibility of repossession. Borrowers can speak with their lender and ask for assistance to avert a repossession. Depending on a borrower's situation, the lender may modify the auto loan terms to reduce the payment or grant a forbearance period, or an option to skip a payment.

Repossession Process

If a borrower is unable to get out of default, auto lenders have no other recourse than to repossess the vehicle. The auto lender contracts a repossession company or uses an in-house repo team to track down the vehicle. This company or team typically visits the borrower's home or place of business to get possession of the vehicle.

After Repossession

Auto lenders do not keep repossessed vehicles. These vehicles are generally sold at auction. But before the auction date, original borrowers can remove personal belonging from their vehicle. What's more, auto lenders will return repossessed cars if original borrowers are able to pay off the delinquent balance in full, plus any late fees or repossession fees. If not, the lender sells the car to a new buyer. If the auction sale price is less than the balance owed to the auto lender, original borrowers are responsible for the deficiency balance and will owe taxes on this amount.

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How Does Refinancing an Auto Loan Work?

Auto loans typically have higher interest rates than other types of property. This is due to the rapid depreciation in value of an automobile. Consumers with a high interest rate auto loan may be able to save significantly by refinancing their auto loan to a lower rate. Before starting the process to refinance an auto loan, borrowers should understand how the process works and how to improve the odds of successfully refinancing their auto loan.

Refinance Process

As with any refinance, an auto loan refinance begins with a borrower applying for a loan. The lender then gathers information on the property. Lenders will determine the value of the vehicle by using a price guide based upon the make, model, mileage and other factors. The lender will also look at the borrower's ability to repay the loan by examining the borrower's credit score and other financial obligations. Lenders will base the approval of the loan and the interest rate offered upon the perceived risk of loan default.

Locating Lenders

Borrowers may contact local banks and credit unions to determine whether or not these institutions write auto refinance loans and what terms they may offer. Another option is to use online loan services. These services gather information on the vehicle and the borrower and offer the loan to a number of lenders. The service then gathers loan offers and presents them to the borrower. The borrower chooses the lender they are interested in working with and contacts them to complete the refinance process.

Vehicle Equity

Lenders are more likely to approve loans for borrowers who have equity in their vehicles. Many borrowers are upside down in their auto loan, meaning they owe more than the vehicle is worth. This makes refinancing the loan difficult or impossible. Various sources, such as Kelley Blue Book and NADA, publish price guides that consumers can use to determine the fair value of their vehicle. Borrowers may need to pay down the auto loan balance before being able to refinance to a lower interest rate with a new lender.

Credit Worthiness

As with any loan, the borrower's credit score, debt levels and income all play a role in the loan approval process. Before seeking to refinance an auto loan, borrowers should request a copy of their credit report and review it for inaccuracies. Borrowers that find problems should follow the credit reporting agency's procedure for making corrections. Borrowers should also take steps to reduce their debt level, increase their income and pay all bills on time to increase their attractiveness to lenders.

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Who is the Lien Holder on a Car Title?

After home purchases, buying a vehicle is the second-most expensive purchase that most people make in their lifetimes. Unlike real estate, though, there is much less paperwork involved in a vehicle purchase. Therefore, consumers often must protect themselves by understanding the process and the potential impasses. One issue that crops up often is the existence of a lien on a vehicle. A lien can stop the vehicle title from being transferred from a seller to the buyer. Therefore, it is important to understand who might have a lien on a vehicle and how to check on lien holders.

New Cars

When new cars are purchased, the title is given to the buyer only if there is no creditor with an interest in the vehicle. In most vehicle purchases, the buyer obtains a car loan to be used for the purchase of the vehicle. The creditor becomes a lien holder on the vehicle. This means that the creditor has an ownership interest in the vehicle. This lien remains in place until the creditor releases it. Generally, that takes place when the car loan is paid in full.

Used Cars

When a used car is sold by the owner, there might not be any lien holder. The owner should have the title, and if it shows no lien holder, the buyer can be assured of a smooth transaction. In some cases, though, a consumer sells the vehicle before the car loan is paid in full. When this happens, the sales process cannot be completed until title is transferred, and that does not take place until the original auto loan is paid. Only then will the creditor release the lien. Because many owners do not want to give their money to the seller until the seller can provide a clear title to the used vehicle, many times the sales process takes place at the site of the lien holder. This allows the buyer to witness the seller paying off the lien, and the buyer receives the clear title to the vehicle at the same time.

Other Lien Holders

In some cases, vehicle owners who do not have auto loans still have liens on their vehicles. These liens are often created because vehicle owners use their vehicles as collateral to acquire other loans, including short-term loans from companies such as American General Finance. In these instances, the question of who holds a lien on the vehicle is more complex. The vehicle owner is less likely to be aware of the lien, and it might require a title inquiry by the vehicle owner to determine who has a lien on the vehicle. This could be the case when an individual is named the executor in a will and is charged with awarding ownership of a vehicle to the individual named in the will. It is also possible for an individual to establish a lien on a vehicle. Regardless of who holds the lien, the information regarding the lien should be listed on the vehicle title. It is important for a vehicle buyer to contact all parties listed as current or former lien holders prior to completing the purchase of a vehicle. The buyer can ask each person whether the lien has been removed.

Title Lien Search

While property title searches often require the use of a title search company or a private attorney, the average consumer can perform a vehicle title history search to determine all liens on a vehicle title. The National Motor Vehicle Title Information System was created by a federal law and is administered by the U.S. Department of Justice. The NMVTIS uses three vendors to provide title searches for consumers, law enforcement and other entities who might inquire about a vehicle's title. Generally, consumers are allowed to use the system only when they are buying a vehicle. By using the service, consumers can obtain a list of all current and past lien holders on a vehicle. Thie system's vendors obtain this information from its network of state departments of motor vehicles. The service provides great help when a vehicle is being purchased and the seller has not disclosed the existence of one or more lien holders. In some cases, the seller might not be aware of a lien. Therefore, it is important to do a search even when a seller seems to be honest and forthright.

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How to Figure the Residuals for a Lease

The term "lease residual value" describes a car's bank-determined future market value or purchase price at the end of a lease term. The residual value, expressed as a decimal, is a percentage of the car's sticker price, even if you negotiate a lower price or provide a down payment. Exact residual percentages often change monthly and differ by vehicle type and lease term, such as the vehicle's model level, mileage allowance and the length of the lease. These factors affect depreciation and future value.

Instructions

1

Calculate the leased vehicle's sticker price. Obtain the car's sticker price by searching a dealer's inventory online or in person. Visit the manufacturer's website to obtain the cost of its vehicles with or without available options and features.

2

Choose the terms of your lease by visiting the dealer or manufacture's website, where you can find term options. Mileage allowances vary from 10,000 to 15,000 miles per year and lease terms often vary from 24 to 48 months.

3

Contact a dealership and ask a salesperson or manager for the car's residual value. Supply the vehicle type and lease terms you chose. If you aren't sure where to find a dealer in your area, use the "locate a dealer" function from the manufacturer's website.

4

Multiply the vehicle's sticker price by the residual value. For example, if the vehicle's sticker price is $20,000 and the residual is .63 percent, your residual value is $12,600.

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