Good day to my fellow Mid-A members. I have a friend who totaled his car in October. He had full coverage and GAP insurance. After the two had settled, he gets a letter in the mail and his credit score drops by like 20 points as the Financial institution (Citi Financial in this case, Hate those Bastards) says he owes $1400.00. Has any one heard of this and if so what would be the reasons he would owe if he was fully covered and had GAP?

 

^ I'm curious too. Cuz say you buy a car for 20k. Put down 5k down payment and owes the bank 15k and your car payment period is 5 years. A year later you car's value depreciates to 16k and you total the car. How's that being handled?

 

What was the amount of his deductible?

 

x2.. sounds like that is involved somehow

 

deductible was $500.00.

 

Your logic is flawed rice king. Assuming the apr is 0%, the payments on the above situation would be $250 a month. You paid down your $15,000 note by$3,000 in that past year taking the principal to $12,000. Assuming your cars value is $16,000 you would get a check for $4,000.

 

OK so say you buy a car for $20,000 and you put $0 down and your payment is $250 a month. In a year you'd paid $3,000 and the principle is down to $17,000. After a year the car's value is down to $16,000. Then your car gets totaled. So insurance will pay the bank $16,000 and you'd have to cover the $1000 out of pocket?

 

That is correct. Gap insurance would cover that difference.

 

Oh man.... I wonder if I have Gap insurance!!!

 

Its usually wise to put enough money down that you dont have to worry about gap insurance, or have the means necessary to pay it off if something were to happen.

 

That's why I'm never planning on totaling my Z

 

 

that happened to me when i had totalled my Z.
i had full coverage insurance and Gap. However, i only had to pay $400. Its the interest off the Gap insurance. How long did he have the car for, do you know?

 

If I am not mistaken it was from April until October. About 6 months or so. Kinda sucks but I guess it is what it is.

 

I know I've thrown it out there, but I work for an insurance company and deal with this crap everyday. Usually the case above is from...
You buy a $15K...a few months later...you're strolling though a dealer lot and see a beautiful 350Z sitting there and have to have it. The dealer will only give you 10K for your car, but you still owe 14K. But since the devious little dealers say they will take that negative $4K in equity you have, roll it into your new car loan for Z, now you are way over financed. GAP insurance isn't going to pay for you being an idiot and buying with negative equity, will only cover the ACV from the Z only. Hope that helps!

 

Wrecking the car has nothing to do with his credit score either. I think you have several facts wrong here or your friend is only giving you part of the story. He would have had to ignore several letters from the lender before they post on his credit report.

+1 - someone knows what they are talking about!! This is part of the problem in american lending right here. People who get upside down in their car payments and just ride the wave until it crashes down on them.