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Posts: 12
Registered: ‎08-05-2012

Auto Loan Settlement - Urgent

My friend has an immediate need to clear up an old auto loan immediately. Already had a court date, asked and received postponement hoping we could settle out of court and wasn't ready the day of the hearing.


Situation: Had auto loan, insurance lapsed and lender added insurance to loan. Vehicle was totaled and they kept thinking the insurance should have paid off the loan and just let years slip by. A few payments were made here and there.


The paperwork does show where GAP Insurance was added, the amount was added to the monthly payment and it was paid.


This pretty much sums it up:


1; Amount owed (including interest, fees, amounts added as allowed by law          $4K more than orig amt financed

2. Sale price of collateral                                                                                                       Couple thousand

3. Expenses                                                                                                                            Thousand

4. Credits                                                                                                                                 Ten Thousand (Insurance paid "book value" of vehicle)

5. Amount Remaining Owed to Us                                                                                     Sixteen thousand


Now attorney comes in and says okay OC says you owe this $16K (above) plus our fees of $6K so the total amount owing is: $22,000.00. 


Please give us a call so that we can work out this matter.


From the way I see it, at time of wreck, the principle balance REMAINING was right at $15K - Insurance paid $9K = $7K less $2K from Auction = $5,000 left over


This we can see but  2 1/2 years into the loan, my friend never thought there would be a deficient but knows he didn't study this closely, he just kept telling the callers that he had insurance on it and it should have paid for it.


I'm just a little confused because in one letter from the OC, I don't understand how they get the #1 up above. I thought loan payoff was payoff, not any interest you missed by not carrying the loan to the entire length and maybe this isn't it, just don't understand how a current principe balance of around $15K turns into $25K before you start deducting and their total starts again at $15K after allowing for the insurance payout of $10K.


I tried to make these figures make sense but one sheet from the OC and then the sheet from the attorney, the figures aren't exact.


We would like to offer settlement and of course, love for it to not be on his record but right now, the urgency is getting is settled asap. Any suggestions appreciated.


SOL isn't even a thought as my friend has been making some payments here and there including probably just months back and he probably wouldn't have had a problelm at all paying $4-5K if that's what they would have been asking right after this happened but he never fully understand the vehicle was upside down and the figures they talked about were so high, it was never just this $4-5K difference anyway.


When you look at the interest, it's easy to understand why it was upside down 2 1/2 years into the loan and this wasn't any highly expensive vehcle, normal, nice family SUV. 


What would you be offering to settle and would you ask for PFD right off the bat?


Any comments/suggestions much appreciated!

Frequent Contributor
Posts: 311
Registered: ‎07-08-2012

Re: Auto Loan Settlement - Urgent

I don't understand. If there was GAP insurance, how does your friend owe anything at all? GAP insurance is specifically to cover the difference between what normal collison insurange will pay ("book value"), and the amount owed on the loan, if the vehicle is totalled. Did he perhaps not actually have GAP insurance, and just had regular liability, comprehensive, and collison?

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Posts: 12
Registered: ‎08-05-2012

Re: Auto Loan Settlement - Urgent

Perhaps it's because he did not have insurance on the vehicle like he usually does and most normally do. I think that situation arose because while he was out of town for an extended period his insurance lapsed and he was notified they were going to put insurance on the vehicle and add it to his monthly payment. Which they did and he just continued to pay the increased amount and probably thought it sufficient since they chose it.

But the paperwork I have specifically calls it GAP insurance and lists the company and as this was several years ago I don't imagine I could do any calling to find out.

Does make me wonder and I will look again closer at the dates, was this GAP applied at purchase and this other insurance later and maybe both didn't pay off. In the paperwork I have, it does not mention what insurance company paid on it.

But again, just to be clear, he thought the insurance they were putting on it would be the primary insurance.
Posts: 12
Registered: ‎08-05-2012

Re: Auto Loan Settlement - Urgent

Just looked at paperwork. The Gap insurance was purchased when he bought the vehicle but a year into the loan I can see where it says "new payment" and payment jumped like $100 like he remembers so that mIght be the primary insurance.

The OC paperwork has a note "Cant file Gap, customer not cooperating".

Unfortunately, he doesn't recall anything about this.
Posts: 12
Registered: ‎08-05-2012

Re: Auto Loan Settlement - Urgent

Called the Gap insurance company at lunch, they have no record of a policy in his name. Said most often either lender changed, mind was changed about the gap insurance, the dealer failed to send in the application or a typo on their part and i just need to find the original paperwork or see if there are policy papers but the papers I am working off of are the ones FROM the lender so it looks like and his payments look like it was paid so somebody got the money for the policy from all appearances.

And I will continue to track this down but in the meantime, due to circumstances I don't want to say here, we need to try to get this issue taken care of, as in settled ASAP.

And my newbieness probably very obvious so suggestions for in what way and how much would you suggest.

Would I do a PFD and say since it appears there should have been sufficient Insurance to have zeroed this account out, but Because of the desire to have this behind us would you be willing to split the difference of $5K for a PFD and we can have certified funds hand delivered in 5 days?

Or suggest we will file bk before paying $22K and mention the actual difference in the first place was $5K and let them throw out a dollar value first? (Someone we personally know suggested mentioning he should file bankruptcy during the talks of an agreeable settlement amount. I don't know the wisdom of that.)

And I'm not even sure how to mention both insurances to the attorneys office other than saying something like "well what amount can we agree upon for this vehicle that had full coverage and a gap insurance policy and too many years have passed to spend time on the "how" we got here..." but suggestions and guidance MUCH APPRECIATED.

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