FAQ: What if my car is totaled but my car was financed?

The big question here is how much do you owe?

For example, if the Fair Market Value of your car is $10,000 and you owe $8,000, your lien holder will receive $8000 and you will receive the equity in the vehicle, or $2,000. However, if the Fair Market Value of the vehicle is $10,000 and you owe $12,000, then unfortunately you are “upside down” or “under water” on your car. What are your options if you are upside down? If you have GAP insurance, go to the next FAQ below, if not here are your options: 1. You can pay the difference. 2. You can Not pay the difference, which would be a breach of your contract with your lien holder and could affect your credit. 3. You can very politely ask your lien holder to put the money you owe into your next purchase. So if the new car you want to buy is $15,000 and you are upside down $2,000 on your old car, then your new finance amount for your new car will be $17,000. 4. The best option is called GAP insurance. See the answer to the next question.