Car Accident Payoff

[sounderella]

So my husband was in an accident yesterday causing severe damage to his truck. He's ok, but the chances of the truck being totalled are very good... although I'm hoping they won't.

If they do, what would be the wise decision to make regarding the payoff? The value is more than what we owe so there will be a cash difference. I'm assuming about 3K. Would it be better to take this cash and apply towards higher rate c.c's and 100% finance the new to us car or should we just use it to make a significant down payment? By the way, there's no way around not getting another car...we work an hour away from each other and don't have mass transit available.

Thanks for all input!

[Denvergirlie]

With the way the credit markets are these days you will have to put down a downpayment on new cars being finianced as a general rule.

You can try to get 100% finiancing, but I would be prepared to have a downpayment.

Go get a new drive, if you can get the 100% finaincing then you can put the other funds on a higher interest credit card, but I wouldn't make that move until you have a new car/truck already in your driveway.

[kork13]

It sounds like you consider the truck still drivable, given your hope that they don't total it out? One option you could look at is to allow them to total it, then buy it back from your insurance company. My mother did this when her car decided to wreck itself (seriously... it popped the emrg. brake and rolled backward out our carport, into another carport in our culdesac). Most damage was simply cosmetic--sraped the right side, crunched the back bumper. Still totally drivable, it just didn't look good. Insurance paid her the value (pre-crash) of her car, then she bought it back from them basically as scrap (a few hundred dollars). Car was worth ~$7k at the time, so she ended up over $6k up, and still had her car. That might be a good option for you to look at. The proviso: the car MUST still be safe and drivable. Also keep in mind that as a totaled car, you would only be able to insure it for liability and nothing else.

If that is not an option, I would save out enough of the insurance payout to make at least a 20-30% down-payment on a good, reliable, inexpensive used car. If money is the issue at hand, you probably want to sacrifice having the best toys for something that will work for you. In the end, the car is just a way to get from one place to another.

[sounderella]

It drives...but the front and back driver side doors will not open. You have to crawl through the passenger side. If I was to keep it would have to def be fixed...it goes beyond cosmetic. There are pictures posted on my saving advice blog. The entry is titled "Car wreck and Christmas Gifts"

[kork13]

hmm... yea, that's pretty bad. I'll just echo what i said, keep some of the money for a car downpayment, and the rest could go to CC debt. Here's the trick--decide NOW how much you're going to keep for a downpayment.

So assume you're planning to find a $9k car, let's say you decide to keep $2000 as your down-payment. Dedicate yourself to that no matter what your payout is, whether it's only $2000 or if it's $4000. That way, you won't be scared out of skimping on your downpayment (which could cause your financing rate to be higher) if you get less than you hope. Then whatever you get beyond that amount can be applied to debt.