Trade in Car With Blown Engine – Value of Car With a Bad Engine

If you own a car or have an idea of the aspects of a car, then you know of car car insurance & payouts.

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This is basically the agreement between you (car owner) and an insurance company that ensures no financial loss in case of an accident, and your car ends up totaled.

This happens when you pay a premium and the insurance company compensates you in case of an accident.

What many are not aware of is gap insurance. Here’s what you need to know:

How Can I Trade in a Car With a Blown Engine?

Gap insurance stands for guaranteed auto protection insurance and it is just as the name suggests.

This is the difference between the actual cash value of the car and the balanced owed on the loan taken.

Here’s an example simplifying the definition. Let us say you took a car loan of 26,000 dollars but you get in an accident after a year of owning and operating your car. The insurance company after the damage has been caused to the car, offers you 22,000 dollars as your car’s value. However, you are left with a gap of 4,000 dollars between the two figures.

Despite being in an accident and the insurance company offering you a certain amount, you are still left with an amount that should be offset to the loan provider.

Gap insurance is what ensures that in case of such an incident, you are not left stranded.

What's The Best Way to Sell a Car With Engine Problems?

Remember, the gap is only created when the loan amount received and the amount received from the insurance company don’t coincide.

Therefore, cash paid car owners cannot have gap insurance, only those with car loans.

How Much Is a Car With a Blown Engine Worth?

Firstly, you are able to purchase gap insurance at the car dealership, however, they might be a bit on the pricier side. Financial institutions also provide for gap insurance and they are fair compared to car dealerships.

With the dollar amount, you are also provided with a choice of paying for it upfront or directing it to the loan amount.

There are certain questions to ask yourself before getting gap insurance:

  • Was there overpayment on the vehicle?
  • What’s your loan to value ratio?
  • All of these questions come right after your car’s been totaled, and you ask yourself – what’s next?

If the loan you owe is higher than your car’s actual worth, there’s higher risk exposure.

This would be beneficial to you if you decide to purchase gap insurance.

However, in a case where the amount owed is not higher than the value of the car, it is not necessarily a must to purchase gap insurance.

Why so?

This is because, in case of an accident, the insurance company will technically give you an amount that corresponds to that of a loan amount. Even if the amount is not exactly the same, it will be close to the car’s actual worth.

This, in turn, brings about close to the total payout from the insurance company to the loan provider.

This equity brings an exemption to those who want to purchase gap insurance despite having car loans.

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Before the above question is answered, there’s one point that needs to be addressed;

Can I cancel gap insurance?

This firstly varies from one institution to the next.

If you think that the gap purchase is really high according to you- and if you are going to refinance the car after purchasing gap from the dealership, you might want to cancel. This is to avoid purchasing gap insurance twice.

Some institutions provide you with a canceling option which might take up to sixty days after the gap purchase. However, this still varies from one institution to another.

Now back to the question of, how long does it take for gap insurance to pay?

The moment you are involved in an accident and the car has been damaged, it is necessary to contact your insurance provider.

This is to be done immediately or within a maximum of thirty days after the accident.

After the car is totaled and you have conveyed this information to the insurance provider, the payout might from each institution.

Some institutions might payout after 10 working days or 14 working days even.

You have to remember that you can only receive your claim if you had purchased gap insurance.

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