Can a Car Dealer Submit a Claim for Damages on a Repossessed Vehicle to My Insurance Company?

A dealership cannot put in a claim for your repossessed vehicle through your insurance company, nor would it want to. Dealerships do not extend loans directly. Your lender pays the dealership for the vehicle you purchased and can collect for the loan amount to which you agreed in your contract.

Full-Coverage Insurance

Although a full-coverage insurance policy is required for your vehicle while you have a loan on it, your lender cannot put in an insurance claim on your behalf. Your lender is listed as the policy's lost payee, not the policyholder. If you wanted to submit a claim for vehicle damages before your vehicle was repossessed, you could do so by contacting your insurance company. If you were at fault for the damage, expect to pay your deductible.

Dealership Involvement

Dealerships, with the exception of a buy-here, pay-here lot, do not extend loans to buyers. Dealerships sell a vehicle and your lender pays for it. In turn, you have an agreement to pay your lender. Buy-here, pay-here lots may have different rules, as the dealer is the lender and the seller. Regardless, if a dealership takes the vehicle back from you, it is not the policyholder and therefore cannot put in a claim to your insurance policy for damages.

After Repossession

After your vehicle is repossessed, you have the right to receive your belongings out of the car. If you are not sure where the vehicle is located, call your lender or local police department. If you do not need belongings from the car, ask the repossession agency when it will return your plates. Otherwise, remove your plates from the car and return them promptly. Call your insurance company immediately to avoid paying for insurance longer than you need to; you may even receive a partial refund.

Bank Collections

Once your lender collects the vehicle, it will be resold privately or at auction. The lender may not get as much money for your vehicle if it is damaged, so you can expect to pay for damages and depreciation at a later date. Once the vehicle is sold, expect to receive a letter stating the difference between the sales price and loan value; you are responsible for the balance due. If you do not pay, the bank will eventually pursue legal action. Unless you claim bankruptcy, the bank will pursue a judgment and may garnish your wages.

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Long Term Loaning for a Car

At first glance, a long term car loan might appear an attractive option because of a lower monthly payment than a comparable short term loan. The Lendingtree website defines a long term loan as 72 or 84 months. While some may argue that choosing a longer loan term negatively affects equity and interest payments, this isn't always true.

Interest Rates

Your approved interest rate depends on your credit, the amount you borrow and the age of the vehicle you purchase. Lenders typically offer the same interest rate for terms up to 60 months, although some may offer lower rates for shorter terms. Loan terms exceeding 60 months usually have higher interest rates. To determine the impact that a higher interest rate and longer term have on your total loan payback amount, use an auto loan calculator (see Resource link). Unless you pay off the loan early, you might pay back thousands in extra interest charges, relative to a short term loan. Ask your lender if it charges pre-payment penalty fees before you decide to pursue a longer loan term option.

Equity

Pursuing a longer loan term might result in decreased vehicle equity. If you pursue a loan term for 72 months or longer without a down payment or a plan to pay off the loan early, you'll likely run into problems if you try to sell your car or trade it at a later date. Expect to provide money out-of-pocket to satisfy your loan balance if you sell the car privately, or to cover negative equity if you trade it in toward a new purchase. Provide a down payment of at least 20 percent to avoid a negative equity situation. This way, you can still take advantage of a low monthly payment.

Dealer Incentives

Dealers often provide low rate financing as an incentive to purchase a particular new vehicle. You might find you can purchase a new car for zero percent. If you can take advantage of a low rate, such as zero or 1.9 percent for 72 months, you might create equity in your vehicle just as fast as with a shorter term loan, without having to provide a large down payment. Use an auto loan calculator to determine the differences in monthly payments and payback amounts. You'll save money by choosing the longer term because of the low rate.

Loan Considerations

Your credit rating and the vehicle you choose to finance effects your loan term approval. With poor credit, a lender might require you to borrow for a shorter term, such as 48 months or less, to obtain an approval. Or, if your approved interest rate is too high, you might have to choose a longer term to afford the monthly payment. Lenders might also require a shorter loan term for older or high mileage vehicles. Low interest rates offered as a dealer incentive or those advertised on lender websites require good to excellent credit. Your actual interest rate may vary and approval terms ultimately depend on your credit score.

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How to Refinance a Vehicle With a Down Payment Required

If you want to lower the interest rate on your vehicle's loan, refinancing can help you save money by paying off the old loan and getting a new one with better terms. However, when you go to refinance, you might find that your car is worth less than you owe on the loan and the lender is not willing to refinance because the loan will not be fully secured by the car. In this case, the lender might require that you make a down payment on your refinance to get the loan balance to less than the value of the car.

Instructions

1

Look at your most recent loan statement on your current vehicle loan to determine the remaining balance left to pay.

2

Enter your car's basic information into a website that specializes in used car values, such as NADA Guides, Kelley Blue Book, Edmunds or Auto Trader. Search for its private party value, which is the best estimate of how much it is worth on the market.

3

Compare the car's value to the outstanding balance on your loan. If your car is worth more than you owe, you will probably not need a down payment and can proceed with the refinance process without worrying about the payment.

4

Contact a lender for auto loans and ask about refinancing your vehicle. Tell the lender the outstanding balance and the car's value and ask how much of a down payment you would need to refinance.

5

Save up money over the next few months so you have the down payment you need. Some ways to save include eating out less frequently, avoiding consumer purchases as much as possible and getting more hours at work to increase your income.

6

Contact the lender again when you have saved enough money and follow the lender's instructions to apply for the vehicle loan. Depending on the lender, you might give the down payment you saved up directly to the lender or you might use it to pay off a significant chunk of your old loan just before refinancing.

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What Is a RV Short Sale?

If you have an RV listed for short sale, it usually sells at a lower price. A short sale occurs because you are facing financial difficulties and can't afford to make regular payments toward your RV loan. Selling the RV as soon as possible reduces your debt and minimizes your lender's losses.

Failure to Make Loan Payments

If you go through a financial hardship and have a loan on your RV, you may find that you can no longer afford to make your regular payments. If the situation continues, the lender may consider you to have defaulted on the loan, repossess the RV and sell it to minimize losses. This scenario hurts your credit score, making it difficult for you to obtain loans in the future. A short sale minimizes the effect of your financial problems on your credit score.

Features

If you think you can't make your loan payment, contacting your lender immediately provides you with more options. Your lender may give you the options of short sale, loan modification or other ways to salvage your credit score. In a short sale, the lender agrees to sell the RV and use the sale proceeds to pay for the loan. Even if the sale price is below the outstanding amount, the lender will not demand that you repay the balance.

Process

If you can't make your loan payments, the lender usually gives you a deadline by which you must make contact if you don't want to face repossession. Beyond this deadline, the lender may claim your RV and your credit score may drop. You need to talk to your lender to explain your situation and provide supporting documents, such as pay stubs. Once the lender agrees to a short sale, you no longer need to make regular payments toward the loan.

Selling Price

An RV short sale aims to quickly turn the RV into cash to pay off the loan, so you may have to sell it below market price. Depending on your particular situation, the Internal Revenue Service may consider your RV to be your home. If so, you can get tax deductions on the loan interest on your federal tax return. Before selling the RV, talking to a tax professional helps you determine the tax effects of a short sale.

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Can I Consolidate My Car Loan?

You might be able to save money when you own several auto loans by consolidating them into a single account. It is possible to consolidate a single auto loan into a package of other loans, but this works best if you own a home. Before you consolidate, however, make sure the trouble of consolidation helps you out.

Identification

Consolidating a car loan happens like consolidation of any other loan -- by finding a lender willing to give you a new loan big enough to cover your existing car loans. Banks are probably going to be the first place you want to check. You can also consolidate a single car loan into a another loan, such as a home equity line of credit or a personal loan. A HELOC is usually easier to get, because it is backed your equity in the home.

Benefits

Consolidating loans may save you money when you find a creditor offering a lower rate than that on your current auto loan(s). Combining several loans often results in a lower overall payment by extending the life of the loan. Put your auto loan in a HELOC, and you might be able to deduct the interest on your tax return. At the very least, you can reduce the amount of paperwork you receive each month.

Tip

No matter how you consolidate your auto loan(s), collect your monthly car payment bill(s), show them to the lender and see what kind of rates you get. Go to several lenders, and never take the first offer. If you take a HELOC, only borrow what you need, and never take out more than 80 percent of the equity you own in your home. Personal loans require a credit check, so pull your report and clean up any negative items on it.

Warning

Some auto loan lenders charge a penalty -- often equal to the interest rate charge had the loan played out normally. Review your current auto lease for penalties and add them to the amount of money you need for auto loan consolidation -- called the payoff amount. Weigh the cost of any penalties against what you might save in a lower interest rate or taxes.

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How to Transfer My Auto Lease

If you want to cancel or end your lease early, you can avoid penalty fess and payments due by transferring your lease to another person. Depending on the bank you lease through, you may have to remain on the lease with the other party, although some banks do allow complete transfers. It is most likely that you will lose any money you put down towards the lease, but you won't have to continue making payments.

Instructions

1

Call the bank that you lease through; have your account number and current vehicle mileage handy. Tell a bank representative that you want to transfer your lease to another party and need instructions to do so. Bank rules and paperwork vary, so you may have to fill out paperwork with the potential lessee or have him call into the bank to offer his credit information.

2

Ask which account information the potential lessee needs in order to apply. You can expect to provide the VIN (vehicle identification number) and either your account number or a reference number provided by the bank. Ask how long the approval process should take and if you will be contacted by phone or mail.

3

Give the potential lessee the account identifying information so she can call to apply. Call at anytime to follow up afterward to check the status of the approval. You can expect to be mailed with a lease transfer application to fill out with the person you are transferring the lease to once the application is approved.

4

Fill out the transfer form with the new lessee and notarize signatures, which is usually required by the bank. Once the transfer form has been accepted by the bank, the new lessee will have to sign her own leasing paperwork and provide insurance for the car.

5

Pay any lease transfer fees required by your bank.

6

Remove your vehicle plates before giving the car to the new owner -- turn them in to your state's motor vehicle department as soon as possible and notify your insurance company that you've ended your lease. Give the vehicle, all sets of keys and owner's manual to the new owner.

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Should I Put Some Money Down If I Do 0% Automobile Financing?

Edmunds.com suggests providing a 20 percent down payment toward your new-car loan to cover the first year of depreciation. A zero-percent loan that doesn't require a down payment amount may seem attractive, but you should still aim to create equity and obtain a monthly payment that fits your budget.

Zero-Percent Loan Requirements

Check with your loan provider to determine the loan term and requirements of obtaining your zero-percent loan. Most new-car manufacturers require a specific term or a down payment requirement for advertised monthly payments. You may also find that advertised monthly payments do not include taxes or fees, which can cost you thousands of dollars. Ensure that the interest rate offer and loan is obtainable without a down payment before you decide not to provide one. You may find that an advertised car payment increases up to $100 without a down payment.

Budgeting

Some zero-percent offers require a loan term of only 36 months. A short loan term creates a high monthly payment. For example, if you purchase a new car that costs $20,000, expect to pay $556 per month even if you offer a down payment that covers tax and fees. The same loan for 60 months with an interest rate of 5.9 percent results in a monthly payment of $386 per month. To obtain the same payment for a 36-month loan, you'd have to offer about $6,000 for your down payment amount in addition to taxes and fees. Provide as much of a down payment as necessary to obtain a comfortable monthly payment.

Depreciation

Consider your vehicle's depreciation. You can determine your vehicle's present depreciation amount by checking its used car value immediately after purchase using Edmunds.com or the Kelley Blue Book website. Expect to provide a full-coverage auto insurance policy for the vehicle, but be aware that your insurance company will pay your lender only for the vehicle's market value; you are responsible for any additional balance due on the loan. You can't predict an accident, but if you should have one, creating some equity in your vehicle upfront can prove beneficial if you should incur a total vehicle loss.

Considerations

If you can afford to pay for a short-term loan with zero-percent financing, you'll create equity quickly. You probably don't have to offer a down payment. For a longer-term loan with a zero-percent interest rate, consider offering enough of a down payment to create equity. Or, consider purchasing a gap insurance policy, which covers your loan payoff if your vehicle is determined a loss and your insurance payoff isn't enough to pay your loan balance. A gap insurance policy may cost up to $600 but can prove a cheaper alternative to a down payment.

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