How does buy back process work on a totaled vehicle

[Orangepeel]

We have a little car that still has a note on it. The damage isn't that bad but of course monetarily it's totaled. I told the insurance I want to buy it back and fix it myself. They are saying since there is a loan on it that the money paid out must go to the lien holder before me. Does that make any sense? Has anyone deal with this? I figured I'd fix it and use the rest to pay on the car loan. I pay the insurance why do I not receive the money first? Any input or help is appreciated. Thank you.

 

[Leo99]

The bank owns the car, not you. The bank wants their money. With the car totaled, you have no more asset other than the insurance payout and a junked car. The bank doesn't want to repo a junked car.

 

[SC Maintenance]

Yes this is correct, because the lienholder is senior in the debt chain. Since you no longer have an asset to secure the loan, the insurance will pay them. They should send you whatever is left over.

 

[JeffKeryk]

Call the bank and talk to them. And remember, everything is negotiable!
Good luck...

 

[Orangepeel]

Yes this is correct, because the lienholder is senior in the debt chain. Since you no longer have an asset to secure the loan, the insurance will pay them. They should send you whatever is left over.

The lien holder agreed to let me buy it back and fix it but the insurance still insists they must pay the lien holder first. That's what I do not understand.

 

[SC Maintenance]

The lien holder agreed to let me buy it back and fix it but the insurance still insists they must pay the lien holder first. That's what I do not understand.

If the lien holder is listed on your state title, then the insurance company is obligated to pay them first. Their senior to you in the debt - because as mentioned they paid for the car.

Its between you and the lienholder at that point. If they want to send all the money back to you and let you continue to pay on the note - thats up to them. I would talk to them. The insurance company has to follow the title.

 

[samven]

The bank is only interested in getting their money. They wont own the vehicle if they agree to take the insurance co payout. If the loan is greater than the value they may come after you for the balance, if the value is greater than the loan they will get their money and you will get the balance and the insurance co will own the car. Then you have to deal with the insurance co to buy it back.

 

[Jdeere562]

Let them pay the bank. They will release the lien on your title and pay you the excess $

 

[Rand]

We have a little car that still has a note on it. The damage isn't that bad but of course monetarily it's totaled. I told the insurance I want to buy it back and fix it myself. They are saying since there is a loan on it that the money paid out must go to the lien holder before me. Does that make any sense? Has anyone deal with this? I figured I'd fix it and use the rest to pay on the car loan. I pay the insurance why do I not receive the money first? Any input or help is appreciated. Thank you.

Thats not how it works.
the bank owns the car.
the insurance pays off the car to the bank.
you get anything left over
you buy the totaled car from the insurance company who will own it after they pay off the current owner (the bank)

 

[johnmyster]

Because when you have a policy on an insured car, your policy gets a rider added to it that says this is the way it works. The insurance needs to pay cash to get the title. You don't have title, so they can't give you the money to take ownership of the car. They have to pay the bank to get the title. See how that works?

Pay off the note before the transaction takes place and it would be different. Title would be transferred to you by the bank, then you'd get the check.

 

[RhondaHonda]

Hypothetical:

Car value $10,000
Loan balance $4,000
Salvage value of the car $3,000
Collision Deductible $500

Insurance pays $6,500 and lets you keep the car. $4,000 to the bank and $2,500 to you.

You keep the damaged car and the $2,500 and do what you want with it.

 

[bdcardinal]

This is why Gap coverage is so important, especially whey you buy a car with a bump on it.

 

[Orangepeel]

If the lien holder is listed on your state title, then the insurance company is obligated to pay them first. Their senior to you in the debt - because as mentioned they paid for the car.

Its between you and the lienholder at that point. If they want to send all the money back to you and let you continue to pay on the note - thats up to them. I would talk to them. The insurance company has to follow the title.

The lien holder is listed as a lien holder on the title but not as an owner.

 

[Orangepeel]

Because when you have a policy on an insured car, your policy gets a rider added to it that says this is the way it works. The insurance needs to pay cash to get the title. You don't have title, so they can't give you the money to take ownership of the car. They have to pay the bank to get the title. See how that works?

Pay off the note before the transaction takes place and it would be different. Title would be transferred to you by the bank, then you'd get the check.

My insurance policy doesn't mention the lien holder at all anywhere.

 

[SC Maintenance]

sn't mention the lien holder at all anywhere.

Doesn't matter - the title defines the lien holder as the most senior debt - and so they will be paid. Its the legal document in chain of ownership.

But feel free to call them and argue. They might send the check right to you if the lien holder sends them a certified document asking them to. I don't know? There not supposed to.

If the lien holder is actually on board with all of this - what is the issue. Just get the money from them once they get it from insurance?

 

[Rand]

The lien holder is listed as a lien holder on the title but not as an owner.

I was wording it simply since you dont seem to get it.
but yes substitute lien holder in what I wrote earlier.

The bank has a claim on your property for the value of the outstanding loan.
that must be satisfied to release the title.
The bank doesnt want "an interest" to your wrecked car.
they want their money.

From the web:
A lienholder is a lender that legally has an interest in your property until you pay it off in full. The lender — which can be a bank, financial institution or private party — holds a lien, or legal claim, on the property because they lent you the money to purchase it.


This isn't that hard to understand.
What are you missing?

 

[Orangepeel]

I was wording it simply since you dont seem to get it.
but yes substitute lien holder in what I wrote earlier.

The bank has a claim on your property for the value of the outstanding loan.
that must be satisfied to release the title.
The bank doesnt want "an interest" to your wrecked car.
they want their money.

From the web:
A lienholder is a lender that legally has an interest in your property until you pay it off in full. The lender — which can be a bank, financial institution or private party — holds a lien, or legal claim, on the property because they lent you the money to purchase it.


This isn't that hard to understand.
What are you missing?

Who pissed in your Cheerios?
I answered the question clearly since not every state does titles the same way. Seems stupid to give the option to buy it back if you cannot in fact do that. They offer it like you can pocket the cash or fix it yourself. Which I was going to do. I didn't realize you couldn't keep the money and fix it yourself as they stated (insurance adjuster) having not been through this it's an all new situation for me. I figured they'd cut me a check and I'd use it to fix the car and still pay on it. Owell....no need for the attitude though. I get having bad days but a little courtesy would go a long way. God bless!

 

[NOTEVIL81]

Wow is it that hard to comprehend?

 

[johnmyster]

Seems stupid to give the option to buy it back if you cannot in fact do that.

The key word in your misunderstanding is "back."

You cannot buy "back" something you do not own. The bank holds title. The bank owns the car. You would not be buying it "back" from anyone. You would be buying it from the title holder be it the bank or the insurance company.

This is why Gap coverage is so important, especially whey you buy a car with a bump on it.

The gap insurance isn't important to people that aren't upside down in their vehicles. It takes lots of various coverages (premiums) to protect your lenders when you're broke. Being broke is expensive.

 

[Leo99]

Who pissed in your Cheerios?
I answered the question clearly since not every state does titles the same way. Seems stupid to give the option to buy it back if you cannot in fact do that. They offer it like you can pocket the cash or fix it yourself. Which I was going to do. I didn't realize you couldn't keep the money and fix it yourself as they stated (insurance adjuster) having not been through this it's an all new situation for me. I figured they'd cut me a check and I'd use it to fix the car and still pay on it. Owell....no need for the attitude though. I get having bad days but a little courtesy would go a long way. God blesout

If it was a personal loan, you could do what you wanted to do. A car loan is tied to the collateral of the car. Since the car is totaled, you've essentially sold the car to the insurance company who is cutting you a check for its value. The bank as a lien on your car, so they get first dibs on that check.