I Wrecked My Car

I often hear from people who have just totaled their automobiles and found that they still owe the finance company money, even after the insurance has been paid. They are usually shocked and don't understand why. They don't realize that the insurance company only pays what the vehicle is actually worth, not what is still owed, which can be substantially more, especially in these days of low down payments, deferred payments, and extremely long payoff terms.

The solution is "gap" insurance, which makes up the difference if this situation occurs. Most leases already have gap insurance built in. But most loans do not. If it's needed, it has to be purchased separately. It's not expensive and is well worth the cost.