Anonymous asked in Cars & TransportationBuying & Selling · 8 years ago

bought car , crashed did not have collision the dealer knew this and now wants the damaged car and more money?

My daughter bought a car financed it, a week later she crashed, she only had liability insurance and the car was totaled, financing fell thru because of crash. Original car price was $7550.00, minus $2500.00 that she gave for down payment,, she offered another $2500.00 for a total of $5000.00 towards the car. . But Dealer wants $2500.00 plus they want the car too. She doesn't think its fair to give the dealer $5000.00 and also the car. She bought the GAP insurance too. She drove the car drove off the lot without any insurance and dealer told her to make sure she returned two days later with proof of insurance. She did take insurance papers to dealer he saw it and did not mention to her that she only got liability even though he was aware that she needed collision because the car was financed and also for the GAP insurance to cover her. She is 19 and this was her first car. .Now he is threatening to repo the car and report her to the credit agencies. What rights does she have since the original contract was with the bank and since that fell thru what can she do. I realize it was her mistake for crashing and not getting full coverage but the Dealer has more experience than her and was aware of the insurance she had , and I feel he is being unreasonable.

6 Answers

  • 8 years ago
    Favorite Answer

    Not to sound like a jerk, but your daughter is about to learn a very valuable and expensive lesson, here.

    As part of the loan agreement your daughter signed, she agreed to buy and maintain full coverage auto insurance that includes collision and comprehensive.

    This is always a requirement in loan contracts because it protects the vehicle owners (her lender) investment until your daughter can finish paying for the car.

    By not maintaining the proper insurance coverage, your daughter breached the contract, which means the car is subject to repossession.

    How much damage is done to the car? Less than it's worth?

    The lender owns the car and your daughter hasn't paid for it. It's theirs, period.

    Your daughter is also fully responsible for the damage to the vehicle that she caused.

    If the damage is less than the worth of the vehicle, then she will need to pay the cost to repair the vehicle and forfeit the vehicle. She also may need to pay additional repossession/storage fees for not maintaining proper insurance coverage.

    If the damage is more than the value of the car, the dealer will probably scrap the vehicle and make your daughter responsible for the amount outstanding on the loan, plus any repossession and storage fees for not maintaining proper insurance.

    What boggles my mind is why would she buy GAP insurance without buying the necessary insurance to cover her responsibility of a basic accident? It makes zero sense.

    I would recommend she cancel the GAP insurance and get a pro-rated refund. It may not solve her problems, but she should get a pro-rated amount applies to her payment obligation.

  • 8 years ago

    You are right the dealer has messed up on this from a business practice perspective, but that is not related to a legal perspective. Most times the dealer will tell the customer to call the insurance company right there or you can go online add the car, and are covered once the insurance company accepts, usually in a minute. I will assume she did not have collision on the trade in, if so then that would cover a purchased car, most insurance companies cover the car at purchase and give you X days to report to them the purchase. Does the contract have VSI, read the contract, that covers the loan amount if car is totaled with no insurance. Probably does not.

    7550 - 2500 down = 5050. That is what she owes.

    As for the contract those are either two party or three party. Very important, read your copy of the contract. A two party is buyer - lender, three party is buyer to dealer to assignee (lender). But the dealer may have another piece of paper work that states deal is contingent on financing. It does happen where dealer cuts a corner or messes up, bank rejects contract and dealer has to call customer to bring back car. Usually in those cases the title has not been transferred so customer can protest, but they are driving a car they don't own and dealer can go get it (not repo) as the dealer is the owner. And the customer can't get plates after the temp tags expire.

    Could they sue or try to report her credit if they hold a valid contract, sure. Would they win, I don't know, they would be considered partially negligent and assuming the risk by letter her drive without insurance.

    Write up what happened and hire an attorney, not talk to, hire them to deal with situation. You might have zero liability. It is the details of the contract and your state law, maybe they broke the law by not verifying insurance? Who knows. My concern is her credit, the 2500 is not easy to swallow, but credit scores are used by insurance companies, ie lower score higher rates and employers use credit scores in hiring decisions.

    And if you settle the matter you will need a documented settlement, TRUST ME the dealer will take your money and then if you don't have the right documentation they will try to collect the rest. And how do you deal with the value of the totaled car, and the sales taxes, they should try to get that reversed, and any other fees they charged.

    They are the experts.


  • Anonymous
    8 years ago

    You need to stop enabling your daughter. She chose to drive with liability insurance only. That's an adult decision and decisions can have bad consequences. Gap insurance is worthless without collision coverage. This is her fault, not the dealer's. She is liable for the value of the vehicle to the dealership. If there is no loan, then the car still belongs to the dealer. She has no right to keep the car, since it does not belong to her.

  • 8 years ago

    Just a lesson learned.. Not sure how she only got liability on a financed car. Thats where the mistake is at.. EIther way she is going to have to bite the bullet on this one.

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  • 8 years ago

    Sounds like you'll be better off talking to a lawyer than random people on the internet.

  • Anonymous
    4 years ago

    I would like to find out more about this as well

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