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auto loan with no gap

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auto loan with no gap

my car was totalled march 18, i did not have gap insurance, leaving a $3900 balance. cap one sent a 75% ($3000) settlement  letter april 21 to pay off debt . am i pushing my luck to wait for a second offer, possibly 50%? or should i contact them with an offer? thank you for advice.Smiley Tongue
Message 1 of 9
8 REPLIES
New Contributor

Re: auto loan with no gap

Break out the actual paperwork from your lender and your insurance company.  Somewhere in the fine prints it will discuss responsibilities for you as well as them in the event the collateral is deemed a total loss.   I would think that your dispute is with the insurance company's valuation of your vehicle.  I assume Cap 1 is the lender and they have no dog in the fight other than they got a check for less than the amount owed and now have no collateral to secure it.   

Check a few reputable sites that price vehicles and assume the lower number given. If it is very different than what the insurance company came up with, you will have to follow the procedures in your policy. 

Message 2 of 9
Valued Contributor

Re: auto loan with no gap

Just because your car was totaled, and you did not have GAP insurance, why do you feel you should "settle" for less then you were contracted to owe.

 

It is not the finance companies fault.

 

What you owe on your car and what it is worth are rarely even close to the same number. Miles driven, negative equity rolled in, sales tax on the transaction all contribute to negative equity.

 

I understand your feelings- why should you have to pay in full, or keep making payments on a vehicle loan when the vehicle is no longer a use to you, but that really is not the question. You signed a contract stating that xxxxx dollars would be extended to you and the company simply wants their money owed.

 

Any offer you decide to "take" you should first figure how that is going to be reported, if you take an offer but they charge off the balance and report as such to a bureau, you aren't really winning anything.

 

Have you gotten another car?

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Credit is not a right, but a business transaction, one that takes into account risk, and charges accordingly based on that risk.
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Message 3 of 9
Senior Contributor

Re: auto loan with no gap


skippy1967 wrote:
my car was totalled march 18, i did not have gap insurance, leaving a $3900 balance. cap one sent a 75% ($3000) settlement  letter april 21 to pay off debt . am i pushing my luck to wait for a second offer, possibly 50%? or should i contact them with an offer? thank you for advice.Smiley Tongue

 

Unless you absolutely flat out cannot pay the full balance of the loan, you should pay what you owe, on both moral and practical grounds.  In moral terms, as another posted has noted, it is not the lender's fault your car was totaled and you did not have gap insurance, they are out the money.  In practical terms, any outcome other than "paid as agreed" may be reported as such on your credit history and be counted as a major negative meaning you would pay higher interest rates and higher insurance rates for a number of years.

 

Did that offer of a 75% settlement say anything about how that would be reported to the CRAs?  Unless that offer says otherwise in so many words, it most likely will be reported as something other than "paid or paying as agreed" to the CRAs.

 

 

TU 791 02/11/2013, EQ 800 1/29/2011 , EX Plus FAKO 812, EX Vantage Score 955 3/19/2010 wife's EQ 9/23/2009 803
EX always was my highest when we could pull all three
Always remember: big print giveth, small print taketh away
If you dunno what tanstaafl means you must Google it
Message 4 of 9
Senior Contributor

Re: auto loan with no gap


skippy1967 wrote:
my car was totalled march 18, i did not have gap insurance, leaving a $3900 balance. cap one sent a 75% ($3000) settlement  letter april 21 to pay off debt . am i pushing my luck to wait for a second offer, possibly 50%? or should i contact them with an offer? thank you for advice.Smiley Tongue

 

Just my opinion, but: you borrowed  the money.  The lender trusted you to honor the contract.  By not paying your loan in full, you contribute to the current economic climate of defaults, lender losses and the resulting increases in APR and tighter credit restrictions across the board.  Anything you fail to pay will be passed on to the portfolio of accounts who do pay.  Remember, a business passes all costs (including losses) on to the consumer (borrower) base.

 

It is important to understand that "good credit" is not a number or report, but a reflection of the personal financial habits and characteristics of that person.  By not paying, you will most likely suffer in some manner on your credit and/or FICO.  But you also present a very alarming trend in the consumer base today, a lack of personal compulsion to honor and pay legitimate obligations and debts.  There is no such thing as free, there is only the question of "who" will pay the price both economically and morally.

 

This forum does not condone disputing correct CRA information, and it probably does not recommend the cousin act, neglecting rightful debt which was willingly entered into by contract and the receipt of money entrusted.

 

IMO, the only negotiation on amounts that should be pursued are with the insurance company on the value of the car and claim paid.

Message Edited by txjohn on 05-17-2009 03:27 PM

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Message 5 of 9
Valued Contributor

Re: auto loan with no gap


skippy1967 wrote: 
cap one sent a 75% ($3000) settlement  letter april 21 to pay off debt . am i pushing my luck to wait for a second offer, possibly 50%? or should i contact them with an offer? thank you for advice.Smiley Tongue

Out of curiosity, are you still making payments to cap one? Or did you stop on the totaling of the vehicle?

 

In my opinion only, Cap One, with you no longer having an asset backing the loan, is trying for a quick resolution to the problem and trying to get you to pay it off by discounting a little. If that offer allows a PIF status or paid as agreed you are quite lucky.

 

 

If so, I would not expect a 50% offer to have such terms.

 

Are you in another vehicle already?

 

 

Signature line begins:
Credit is not a right, but a business transaction, one that takes into account risk, and charges accordingly based on that risk.
Your credit score is an aspect of your credit profile. Important? yes but just an aspect. Contributing/supplemental information determines the finer point of the deal. Ask any question, respect me not to get mad if the answer is not the affirmation you are looking for,
Message 6 of 9
Senior Contributor

Re: auto loan with no gap


usmc58555 wrote:

skippy1967 wrote: 
cap one sent a 75% ($3000) settlement  letter april 21 to pay off debt . am i pushing my luck to wait for a second offer, possibly 50%? or should i contact them with an offer? thank you for advice.Smiley Tongue

Out of curiosity, are you still making payments to cap one? Or did you stop on the totaling of the vehicle?

 

In my opinion only, Cap One, with you no longer having an asset backing the loan, is trying for a quick resolution to the problem and trying to get you to pay it off by discounting a little. If that offer allows a PIF status or paid as agreed you are quite lucky.

 

 

If so, I would not expect a 50% offer to have such terms.

 

Are you in another vehicle already?

 

 


USMC, you may be right, the lender might be willing to lose a thousand dollars in order to close the book on a loan for which there no longer exists any security, and if the offer allows a "paid in full" status then OP should pay the $3K immediately, recognize excellent luck when it comes, and make sure never again to need such luck on any debt.

 

TU 791 02/11/2013, EQ 800 1/29/2011 , EX Plus FAKO 812, EX Vantage Score 955 3/19/2010 wife's EQ 9/23/2009 803
EX always was my highest when we could pull all three
Always remember: big print giveth, small print taketh away
If you dunno what tanstaafl means you must Google it
Message 7 of 9
Valued Contributor

Re: auto loan with no gap

They Will Not settle.

 

Dispute the value with your Insurance carrier...They assess the value on current value Retail market in your area.  If you can find enough of your vehicle to make them re-assess the value you might get somewhere.

 

GAP is always required until you own the car outright..............This is a golden insurance rule!!!!!!!!!!

Don't mean to sound harsh, but I am an Insurance Agent and am trying to get the point out to everyone.......

 

I wish you the best of luck.....
Mortgage Lenders Mid-Score 778 I AM A HOMEOWNER!!!!! 30 Year 5% Fixed Rate, closed on 3/18/09
Message 8 of 9
Regular Contributor

Re: auto loan with no gap

I financed a $14K car and the bank added GAP for only $132. Who knows if Crap One will settle more than likely they will mess up your credit report in the process.

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Message 9 of 9