We Serve Throughout the State of Colorado

Denver Personal Injury Lawyers

The recognized leaders in personal injury law

This Is What Happens if You Total a Financed Car in Colorado


After a car accident, the insurance company will inspect your vehicle for damages and estimate its repair costs. If the insurance company determines your car is beyond the cost of repairs, it will consider the car a total loss. 

What happens if the insurance company totals your car, but you still owe money on it? 

Below, our Denver car accident lawyers explain what happens if you total a financed car in Colorado.


You Have the Right to Pursue Compensation From the At-Fault Party

If you’ve been in a Denver car accident as a result of another person or entity’s negligence, you may be able to pursue compensation for property damage, medical bills, and lost wages. 

Speak with an experienced car accident attorney to discuss your legal options. The Denver personal injury attorneys at Zaner Harden Law handle the hard work for our clients while they focus on moving forward. 

We can deal with the insurance companies on your behalf and fight for the maximum amount of recovery you deserve.


What happens if you still owe money on your totaled car?

The insurance company will total your car or mark it as a total loss if it determines that your car is more expensive to fix than it’s worth. 

Under Colorado law, insurance companies generally use a 100% threshold to determine when to total a vehicle. A 100% threshold means the car is considered a total loss if its repair cost and salvage value are at least 100% of its fair market value immediately before the damage. 

Fair market value is also called actual cash value or ACV. 


What happens if you total a financed car and you still owe money on it?


1. The insurance company writes a check to your finance company for the actual cash value (ACV) of the vehicle.

If the insurance company totals your car, it will not pay for the repairs to fix it. Instead, it should pay out the ACV of your vehicle. 

However, if you still owe your finance company money for your car loan, then the insurance company will not give you the insurance money. 

Generally, the terms of your car loan require you to apply any insurance payments you receive to your outstanding loan. Because of this, the insurance company will send a settlement check for the car directly to your finance company. 

Remember that once the insurance company pays for the car, it is no longer yours. You do not need to insure it anymore. However, you may still have your car loan to pay.


2. The finance company will deduct what you still owe on your car loan and send you a check for the difference.

Once the finance company receives the insurance company’s settlement check, it will deduct what you still owe for the car. 

If your car’s fair market value is more than what you owe on your car loan, you will get to keep the rest of the money. The finance company will send you a check for the difference.

For example, if your car’s ACV is $10,000 and you owe $3,000 on your car loan, then the finance company gets $3,000, and you get $7,000. 

However, you may owe more money on your loan than the ACV of your car. What happens then? 


What to Do if Insurance Does Not Pay What You Need

Unfortunately, it’s not uncommon to end up owing a finance company money on a totaled car you no longer own. For example, this situation may occur if it’s early in your financing or you have a long-term loan. 

If the ACV is less than the remainder of your car loan, then you may face a couple of different scenarios:


First Scenario: You’re Responsible for Paying the Difference

If the ACV check from the insurance company is less than what you owe your lender, then you are responsible for paying the difference. You will need to continue to make your car loan payments. 

A car accident and total loss of a vehicle do not negate the financing on the vehicle. 


Second Scenario: You Have Guaranteed Asset Protection (GAP) Insurance

Guaranteed Asset Protection, also known as GAP insurance, protects motorists from out-of-pocket costs in the event of a total loss. GAP insurance pays the finance company the difference between the insurance company’s settlement and what you still owe on your loan. 

GAP insurance is optional add-on protection when you finance or insure a vehicle. Check your policies or call your finance or insurance company to determine whether you have GAP insurance.  


Did you crash a car that you still owe money on? Our Denver car accident attorneys can help.

Car accidents can result in serious property damage, injuries, and death. Did you or a loved one suffer physical injuries and damages in a car accident as a result of someone else’s negligence? Schedule a consultation with our experienced Denver car accident lawyers. You may have a viable car accident claim to recover compensation for your damages. 


A car accident attorney can walk you through what happens if you total a financed car. We can help you negotiate a fair settlement with the insurance company.

You have the right to contest the insurance company’s valuation of your car if you disagree with it. We can help you obtain the compensation you need to pay off your car loan and move forward after an accident.


Call Zaner Harden Law at (720) 594-6256 to schedule a consultation to discuss your case. You can also chat with us online or fill out our online contact form.


Contact our Denver Car Accident Law Firm Today For Help

For more information please contact Zaner Harden Personal Injury Lawyers to schedule a free initial consultation with a Denver car accident lawyer.


Zaner Harden Personal Injury Lawyers

1610 Wynkoop Street, Suite 120. Denver, CO 80202
(720) 613 9706

Where We Are

We are located across the street from Union Station in downtown Denver and offer validated parking for all our clients. We also have offices in Boulder and Colorado Springs.