An insurance company will total a vehicle if the cost to repair it is more than what it is worth or if it will remain unsafe even after repaired. Unfortunately, an insurance company totalling a vehicle is not required to pay the car loan balance in a settlement. The insurance company is only obligated to pay the Actual Cash Value (ACV) of the vehicle- the amount you will need to purchase a comparable used vehicle. The insurance company may use a software program to calculate your vehicle’s ACV or Internet sites, such as Kelly Blue Book and National Automobile Dealers Associates Used Car Guide (NADA). This amount can be far less than what you owe on your vehicle loan.

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