08-07-2012 09:08 PM
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!
08-08-2012 06:30 AM
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?
08-08-2012 08:21 AM
08-08-2012 08:51 AM
08-08-2012 01:31 PM