I totaled a new car and I owe $3,500: can I take out a loan from a different bank to finance a new car and pay off the amount I still owe on my old car?
I'm in my mid-twenties and I have excellent credit. I just bought my first car back in April. I took out a $13,000 loan from a bank to purchase the car. Unfortunately, I got into a car accident two weeks ago and my car was totaled. When I purchased my car, I was not aware of gap insurance. I do have a extended warranty for the car.
The difference between what I owe and what my insurance covered is $3,500. I called the bank to see what options I have. They told me I owed the full amount in 30 days, or they would send it to their recovery department and that it would negatively affect my credit score.
Do I have any recourse here? I need a new vehicle as soon as possible. Should I take out another car loan from a different bank and see if I can rollover the $3,500 amount into that loan? What is my best option for getting a new car?
The short answer to your question is: Yes, you still owe the amount of the original loan. Any amount that insurance is covering that is less than that, you would be responsible for. In your case roughly $3,500.
If you are to purchase another car you may be able to wrap that amount into the loan, but that will depend on the bank and if they are willing to allow it. If you get a good deal on a car that is less than KBB (Kelley Blue Book), it should help your chances. Smaller/Regional Banks (Credit Unions) will likely be easier to work with.