Car Total Loss Today - Best Strategy for Couple with High CU?

[ScoreUpScaleDown74]

This week DH was in a car accident (not at fault). He is doing okay. The car was totaled by our insurance company today. We just started having enough income to actually chip away at our combined $135K CC debt which is basically 100% credit utilization. We can go a while with one car, but we will want to get a second when it makes sense. I can throw about $15K at whatever of our 6 credit accounts makes sense this month. I'm expecting another $15K in a month or so and some smaller "above average" months to follow.

Me - Fico Score 8 : Equifax - 749, TU - 739, Experian - 738 (Revolving & Open-Ended Accounts $89,250) - There's a 30,600 Amex of mine

DH - Fico Score 8 : Equifax - 735, TU - 720, Experian - 709 (Revolving & Open-Ended Accounts $82,998) - that counts on both bc he's auth user

No lates, both 33 year credit histories (which is crazy bc we're not that old but whatever) and only negative is that credit utilization is 100%.

We have $7200 owed on the totaled car and we're in the settlement process but it looks like we'll receive about $13,500 which will pay that off and leave about $6,300.

Normally, I would tackle paying both of us off together, but since we unexpectedly need to replace a car: How would you approach credit payments to boost a score before needing to apply for a car loan? (My assumption is that we'd rather reduce high interest CC debt even if we have to take a new low interest car loan.)

[Jnbmom]

Glad your DH is ok, you can always replace a car. I must say I am a little shocked your scores remain that high with 100%, but good for you.

If you are gonna get back around 6300 have you considered just buying a used car outright with that money, that way instead of another car payment you could be paying down your debt?  If you are getting that extra money definitely pay down those cards.

Just my 2 cents .

[Anonymous]

Agreed completely with Jnbmom - with that much debt sitting at 100%, you could easily be looking at AA from a lender due to the UTI and the dollar value, which could create problems quickly. Get a used car in cash and put the money you used to use on car payments toward the debt, in addition to whatever payments you used to make. Get the debt down and then buy a new car if you wish at that point. 100% UTI is a red flag on fire especially I would think when talking about mid-five figure totals. If the lenders got spooked, they could balance-chase you or close you completely, leaving you still liable for all amounts owed.

[jl4]

Going to toss something out there, but have you spoken with a Laywer regarding your accident? We had a minor fender bender about a year ago and the insurance company was all too happy to just pay the medical bills and be done with it. Since we weren't at fault, having a lawyer helped dramatically (3x medical plus several thousand in other compensation). 

If you're looking to get out of some of your CC debt or have more leverage when purchasing another car, that extra money will help.

[Anonymous]

Having been through a real 3 year auto accident legal case, I can assure you it’s not as easy as it sounds...if it was everyone would do it.

[jl4]

Don't get me wrong. It is not a quick and easy solution. It never is. But insurance companies stay in business by paying out the least they can get away with.

[ScoreUpScaleDown74]

We're pretty thankful that DH came through with what seems to be just a bruise. He's been checked out. I am negotiating the car settlement with insurance - they left off a couple of the car's features and included some comps that clearly had more wear on them than ours (like double the miles of our low mileage car). 

I made some extra payments with some of the cash on hand (pre-car settlement) to get them down to 94% . I know it's not much, but I'm going to see what dents I can make in the levels of credit utilization while we see how long we can hold out with one car. Our surviving car is in good mechanical shape, but it's not ideal for everyday. It is paid off. 

[Anonymous]

So just my 2 cents.  I was T-boned in an intersection by an 87 year old lady running a red light on 9/23.  Got an attorney the following day, they delt with NMAC and my insurance company.  Car was only 5 months old, but i had GAP, and they paid the entire car off.

Due to me being financed through NMAC, the insurance company totalled the car out just one week later, and they gave me a promise to pay letter from my car insurance company.  Took that letter to the Nissan dealership, told them i wanted the same exact NMAC financing, they didn't even pull me hard, they did a soft pull.

Got the fully loaded version of my totaled car, 2019, with only $500 down.  DTI was 68%. Credit score .....594.  Yes, a 594 for a $40,000 car, rate of 9.3%.  Contact who you were financed with.  If you had a very good payment history, and you were not upside down, it is a very good possibility they will finance you on the same or similar ters if you purchase a similar make and model.

Also, get an attorney if it was a no fault accident.  They will only take your case if you have gone to the emergency room. I thought I was OK, until I literally was having panic attacks getting back behind the wheel.  Also I still have 3 knots on my head from all the airbags deploying, and have been super depressed about my bills instead of getting better.  It wouldn't hurt to check into it.

[ScoreUpScaleDown74]

Thanks for this reply, parts of it were on my mind. The loss settlement is getting finalized and we have a 0% interest on the car loan. I HATE to lose that. I was wondering if there was a way to keep working with that lender if we bought a similar car from the same company. The possibility that we might get something favorable out of working with the lender we're paying off is encouraging. We had an economy car and would just like to get back into same. Mostly I want to minimize the impact of this loss on our lives and keep moving forward.