Accident, no GAP, Loan Terminated, Total Loss

What is the name of your state (only U.S. law)? CA

My car was hit by a drunk driver and declared a total loss. Insurance settled $7k. I still owe $8k after the settlement, which I understand I am responsible for because I did not purchase GAP insurance.

However, I just received a letter from Toyota Financial stating that If I do not pay the remaining $8K in full within 20 days, the loan will be "charged-off" and my credit rating will be affected.

Obviously, since there is no collateral, they do not wish to allow me to continue making payments on my secured loan. I can't afford to pay a lump sum. My question is, can I sue the driver who hit my car (DUI) for causing me to lose my loan?

No, the person who hit you is only liable for the car, not the loan. You may be able to roll your balance into a new loan for your new vehicle.

Did you sign a release when you settled the prop damage claim? (Why did you settle for only $7k??)

Reply

No, I haven't signed anything. My insurance sent a check directly to Toyota.

I told them I wanted to keep the car because the damage was purely cosmetic, so instead of the $10,500 market value, my insurance reduced the settlement to $7k. My friend is doing the body work for free, but the parts cost me $3900.

marcylb1 said:

No, I haven't signed anything. My insurance sent a check directly to Toyota.

I told them I wanted to keep the car because the damage was purely cosmetic, so instead of the $10,500 market value, my insurance reduced the settlement to $7k. My friend is doing the body work for free, but the parts cost me $3900.

Click to expand...

You need to pony up the $1000 to Toyota right away.
Even if you had gap insurance, it wouldn't have helped if you'd done this.
The letter probably predated them receiving/processing the check.

marcylb1 said:

No, I haven't signed anything. My insurance sent a check directly to Toyota.

I told them I wanted to keep the car because the damage was purely cosmetic, so instead of the $10,500 market value, my insurance reduced the settlement to $7k. My friend is doing the body work for free, but the parts cost me $3900.

Click to expand...

Even if there was some right to sue the other guy, you would have nothing to sue for. Your car loan would have been paid off entirely plus you would have had $2500 in your pocket ($10.5 value - $8k payoff= $2.5k). You are the reason you owe the $1k to Toyota, not the other guy.

Or: you owed $15k balance and due to the payout of $7k you still owe an actual $8k?

Clarification

Loan Balance: $15k
Market Value: $10,500
Insurance Settlement: $7k ($10,500 less salvage value of $3,500)
Cost to Repair: $3,900

Sorry I wasn't clear. I owe Toyota $8K after they received the insurance settlement.

ouch!.

If it was me, I would have let them pay the $10.5 and owed the $4.5k and just bought a different car. As it is, you will pay the $8k plus the $3.9k ($12k) to own a car with a salvage title that was only worth $10.5k prior to the accident.

I guess in the end it will end up somewhere similar in cost though. If you let them take the car, went out and replaced it with a $10.5k car and paid the $4.5k, you would be in the same place except, in reality the $10.5k new car would be worth $10.5 where yours will be worth less due to the accident and salvage title.

Not Even Small Claims?

I get what you're saying, but I have circumstances that have left me unable to qualify for another loan. Also, I contacted Toyota when it happened, they told me they won't let me roll this loan into another loan. That's why I chose to salvage the car, so at least I'd have transportation while making these payments.

I can afford the payments plus the repairs, but not the lump sum that is being demanded now.

Just to be clear, for anyone with legal expertise, there's no way that this sudden demand for payment makes him responsible for anything other than the market value of the property? It seems unfair that he has taken away both my transportation and my means to finance (damage to collateral).

marcylb1 said:

Just to be clear, for anyone with legal expertise, there's no way that this sudden demand for payment makes him responsible for anything other than the market value of the property? It seems unfair that he has taken away both my transportation and my means to finance (damage to collateral).

Click to expand...

How can one be more clear?

ecmst12 said:

No, the person who hit you is only liable for the car, not the loan. You may be able to roll your balance into a new loan for your new vehicle.

Click to expand...

The person who hit you is NOT responsible for your (questionable) financial decisions.

It seems unfair that he has taken away both my transportation and my means to finance (damage to collateral)

Click to expand...

.

All he has taken from you is the $10.5k value of the car. That is what he is liable for which you are being reimbursed. Your personal situation is not his fault nor his liability.

The onus was upon you to adequately insure your liabilities so you could not end up with this type of situation. Since you failed to do that, you are a victim of your own actions.

Thanks.

I appreciate the answers.

Keeping the car was unwise. You now have a car that's worth less then half what it would have been EVEN if it is repaired perfectly (which it won't be) AND you're out $1000 out of your pocket plus the repair costs. You will also have to jump through several hoops to be able to register the salvaged car in your state and actually be able to drive it legally - more money.

It may not be too late to sign the salvage back over to your insurance company and get the rest of the money.