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Upsite down in a car loan and other issues, please help!

by Jason
(Fresno, CA)

How long do accidents remain on your record and still affect insurance quotes?

Also when financing a car why do you have to meet the financing companies insurance requirements?

If the car is totalled and ends up being worth less than you owe, won't they still require me to pay them the difference?


Hello Jason,

You have several Questions here.

How long an accident is in your record? It depends on the state, and how bad is the accident. Also, different insurance companies do different things, some might look you up for seven years, some might only 3.

If you finance a car, you must follow the financing agreement to insurance the car. If you do not, the insurance company will get their own insurance and add that to the value of the loan (a substantially more expensive policy that protects the bank and you. The insurance company will have rights against you).

If the car is totaled and it is worth less than the value, then you are upsite down. Yes, you would have to pay the difference. The solution is that when you finance a car, you can get gap insurance (extra fee, but often pretty cheap) to protect you against this.

To learn more about total loss and how that process works (and how nasty it can be), please see:

Good Luck,

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