Title Loan and Car Wreck

Updated on October 21, 2011
S.R. asks from Houston, TX
10 answers

We had to get a title loan at the first of the year on our truck and still paying (PLEASE DONT EVER GET A TITLE LOAN) but my question is what happens when ur still paying on the loan and the truck got in a wreck and got total. We have payed double already on the loan then what was given to us. Do we still continue paying the loan or stop. we just got our credit straighten and we don't want to miss that up. Thank you

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answers from Fort Wayne on

Unless you have "gap insurance" you have to keep paying. Call your insurance agent and see if you have gap insurance. If you do...they will pay off the loan and you will be done. If not...you are stuck paying for the remainder of the loan.

3 moms found this helpful


answers from Las Vegas on

Gap is usually sold to you by the dealer or lender. It is unlikely you have gap for a title loan, but it is always worth a shot.

You mentioned you just straightened your credit and don't want to mess it up. If you borrowed the money than you have to continue to pay the loan under the terms agreed upon. Otherwise, they will report you to the credit bureaus and you will have marks on your credit. Not to mention the lending institution you borrowed from will still want their money. At this point if the car is totaled, the collateral no longer exists.

2 moms found this helpful


answers from Albuquerque on

You still need to pay on your loan whether the car is driveable or not. Do not stop paying - you will be in default.

If your insurance company gives you a payout on the totalled car, use it to pay off the title loan. See if a bank or credit union will give you a loan to pay off the title loan - they truly are horrible loans that end up costing tons more than the face value.

2 moms found this helpful


answers from Washington DC on

if you got a title loan, there should be a lien on the car...so ANY pay out given by an insurance company would FIRST go to the lien holder.

You are still responsible for the loan - car totaled or not. Contact the lien holder and negotiate a settlement so you can move on.

Remember this...NEVER get a Title Loan!!! :) Sorry - they suck. Had a GF do that and it was he$$. HORRIBLE HORRIBLE he$$!!

1 mom found this helpful


answers from Anchorage on

You are still responsible for the loan, it is not the lenders fault if the truck got totaled.

1 mom found this helpful


answers from Springfield on

If your credit is better now, I would go to your local credit union and apply for a loan to pay off the title loan now. They should give you a very reasonable rate (nothing like the arrangement with the title loan). You could pay off the title loan and then have the credit union loan to pay off for a much lower price. Do what you can to just get this taken care of.

1 mom found this helpful


answers from Oklahoma City on

You have to take the money you get and pay it off so it is free and clear. Talk to the lender about the situation though to be sure.

One of my friends got a new car, payments set up automatic deduction through their checking account, and he hubby had a wreck the next week and totaled it. They got insurance and paid it off. The car payments kept coming out and coming out for months, they had paid off the entire loan with the insurance money. They finally had to close the account to get them to stop. Once the payments stopped coming the company tried to sue them for the missed payments. They told them they had the records of it being paid off, they had to nearly go to court to get the other department of the loan company to stop billing them. It can be annoying dealing with bureaucracy.



answers from Johnson City on

have not read the other responses, but in my expierences a title loan is a lien and any time there is a lien and the vehicle is totaled the insurance company takes the entire cost of the vehicle, adds any extras that you have added to it i.e. dvd palyer, rims anything extra you put on it, they ask about liens and you give them the info if they dont already have it, and they cut a check to cover the lien and usually send that one to whom ever the lien is through, thats where they buy the title and the wreched vehicle, and if there is anything left you get the difference, if not then you have to pay the remaining balance of the lien.
Hope this helps.


answers from St. Louis on

I would think they put a lien on the title so that even if the check for the damage is cut to you you will not be able to release the title until the loan is paid off. Without handing over the title the insurance company will stop the check because they are legally buying your wreck from you when they total.

Regardless of the lien if you do not continue to make payments you will trash your credit.


answers from Phoenix on

I'm an insurance agent...call them and ask them. That's not something you want to mess around with. My hubby and I got a title loan and the interest rate was 125% so I too hope NO ONE ever gets one! Good luck!!!

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