I can drive my car to another state and register it there, and the state cannot prevent that.
I own the car.
How does buy back process work on a totaled vehicle
- Thread starter Orangepeel
- Start date
I own the car.
That's what I mean, the state can't own your car, its yours. Or the bank's.
I don't know why the previous poster said that the state owns the car. Maybe because we register to drive on public roads? But it still can be driven on private land without registration.
No, @RhondaHonda's numbers are correct in the hypothetical example.
The difference between the $7000 value and the payout of $6500 accounts for the owner's collision deductible of $500.
Yep. @PandaBear In my hypothetical example, the $3,000 is what the insurance company would recoup selling it at Copart. They will just deduct that from the $10k and let you keep it instead of you want it, then they take your deductible, as they would whether you keep it or not.
Value is what the revenue could be generated when the physical product is sold. If the bank had to repo the new car, they couldn't recoup any revenue out of the dealer prep nonsense, various fees, and additional service/warranty bits. There is no value add for all the additional nonsense. So you're upside down when you finance fees and services into a physical good.
You buy a house - even if there was another buyer at the same price, you'd loose >6% if you had to instantly flip. So the "value" is 6% what you paid...because agents.
This has been properly answered over and over. Im moving on.
If that's your definition of "value", almost all products can only be financed to 80% whether there is add on or not. Factory package is also add on that likely won't sell for much, just that they were added on by factory not dealers.
Maybe that's the right way to finance, like how lease have a downpayment, but that's not how most people buy cars because most want to finance the whole thing. I think if this is a big enough problem like mortgage they would mandate gap insurance. Most likely when they have to repo the price stabilized and most repos ended up not being up side down anyways, or most lenders can find a way to recoup the gap (a few thousands) unlike a mortgage (with laws preventing it). Maybe mandating the lenders to eat the cost of the "gap" is the right way to do it so people can't borrow too much, I totally endorse that. We have too many 9 to 10 year loans to people who have no way to pay it back eventually, just don't lend to them and force them to borrow less would be ideal.
Everything has a cost, if we mandate this and that it would increase the cost for lenders and pass down to the buyers eventually. I think it would be a good thing, but that's not what the market has decided and both buyers, sellers, and likely lenders are all in it.
Maybe gap insurance is the band aid and not the solution. Without it people get forced into down payments. The bank only lends the recoverable amount. Anything beyond that is a calculated risk on their part that gets factored into the fee/rate. Fewer customers are therefore upside down. AKA, they can more likely afford the thing they're financing. I fail to see the problem.
It is just another financial product.
There is a need for lending, someone wants to make money off lending but only accept risk up to a certain amount.
There is a need for insurance, someone wants to make money off insurance but only accept risk up to a certain amount.
There is a need for whatever is left, someone don't mind taking the remaining risk but they want to be paid more than the 2 guys above.
You can say ban everything, protect people from everything, only let them do what is good for them, etc. How far do you want to go? It would be like forcing people to do "No meat Monday" or "You cannot open shops on Sunday" or prohibitions. To me as long as there are many buyers and sellers out there it is a fair game. You can't protect everyone from their impulses but you can prevent them from overpaying to only one guy (monopoly).
Insurance and financial markets are highly regulated. I'm not suggesting to regulate something that presently exists in the unregulated market. Banks are publicly supported. (They get money to lend from the federal banks.) It's in the public interest that they don't lend in a way that makes public financial policy a cesspool.
Same argument for legalizing illicit drugs. You know, since our economy is based on consumption and we need more consumers to consume more things. We wouldn't want to nanny them. It's not the govs job to protect people from bad decisions, right?
I'm suggesting we shouldn't allow mechanisms that wind up being used to finance people up to their eyeballs. 2008-2009 mortgage crisis tightened that market up. Big efforts right now to get a government that is fiscally responsible. I don't think we can expect it out of our government if we don't expect it across society.
When an appraiser comes to look at your house, he doesn't add in the "cost" of the home warranty, refrigerator warranty, etc., into the "value" of the house. This is a check between the "value" of the house and the amount financed. Same with cars. I shouldn't be financing in the undercoating and paint protection and floormats. Those things don't add value when it goes to repo auction.
