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Totaled Your Car But Still Owe Money On It? Here Are Your Options

Marc Skirvin
Marc Skirvin

What's in this Article

Did you know that, according to CNBC, one out of four cars in the US is at least 16 years old—and that this is a record high of 19 years when it comes to vehicle age? For this reason, many Americans are looking for a way to get a new car or junk their old one.

If you’ve totaled your car, but you still owe money on it, then you’re probably asking yourself the question, “Can I junk my car for money to pay off my debt?” Other questions you’re asking yourself might include:

“Where can I sell my totaled car?”

“Will I be able to pay off my debt with the money I make from junking my car?”

“What other options do I have to pay off my car?”

It can be confusing to know what to do. If your car payment is coming up soon, this confusion turns into frustration and stress. That’s why we’ve put together this guide. By helping you understand your options and what steps to take, we’ll get you out of this difficult situation.

Soon, you’ll have the money you need to pay off your totaled car. Read on to learn more.

Understand Your Situation

The first thing you need to do when you’ve totaled your car but still owe money on it is to understand your situation. This will help you decide if you want to keep your car when your insurance company declares it as a loss or if you prefer to sell it as a junk car. Don’t worry; we’ll review both of these options in detail later in this article.

Now, however, you need to understand the financial situation you’re in. Generally speaking, when a car is totaled, the owner often still owes money on it, sometimes thousands of dollars in car loan payments.

You might be thinking, “But what about my insurance?” Sometimes, having the right kind of insurance means that you won’t end up in this unfortunate situation. However, if you’re reading this article, then it means you didn’t (understandably) plan for your car to get totaled.

If you didn’t, then this means you didn’t plan ahead by getting car insurance that’s thorough and includes GAP insurance. So now, you’re stuck in a situation where you still owe quite a lot of money.

The Financial Details

This situation isn’t all bad. Even when you total your car, any insurance provider pays you the cash value of your car—the value it had before you totaled it. They will, however, subtract your deduction from this amount.

When your insurance company determines the pre-crash value of your car, there’s a chance that they’ll undervalue it. If this happens, then you’ll still owe some money on your car even though they’ve given you some.

The reason this happens is that the value of a car depreciates fast. From the second you drive away from the car dealership, it starts to depreciate. If you’ve spent even one, two, or several years using your car before totaling it, its value is much lower than you might consider it to be.

For this reason, you can end up in a terrible financial situation. Fortunately, you have some options that can help you. Let’s review these now.

Insurance Company Sells the Car

Usually, when your car is totaled, and your insurance company declares it to be a total loss, your insurance company will keep your car and sell it for parts. They do this by shipping your car to a salvage auction. At this auction, they sell the car and make a small profit from the sale.

If this is the option you choose to go with, it means less work for you. The insurance company does all the work, then returns to you with what you now owe. This calculation is made by subtracting the profit they expect to make from your car’s sale at the salvage auction and your deductible.

However, this option also means less money for you. This is for two reasons. One is that they have already likely undervalued your vehicle when estimating what they expect to make from the sale. Additionally, they are not specialized in auctioning off vehicles. They don’t know where to get the best price.

For this reason, you can make more money by selling the car yourself. If you’ve been thinking, “I might junk my car for cash,” then this is an option you have that can get you more money. Let’s review the options you have when it comes to selling your car or parts of your car instead of your insurance company doing it for you.

Parting Out Your Car

If you’ve thought to yourself, “I want to sell my junk car,” then something you should do before selling off the entire car is to think about parting out your car. Depending on the totaled car’s damage and what your know-how of car mechanics is, this can be a good option for you.

However, this can be a long process. This is because you need to disassemble the car, after which you’d have to find buyers for each part. Sales of each part could take a long time. Depending on what car you have and where you’re based, this process could take months.

You might consider hiring a mechanic to take your car apart for you, but this would be an additional cost. Eventually, you’d be able to recoup your money, but this option might not be worth your time and money.

Selling Your Car Privately

If you’ve wondered to yourself, “There must be someone out there who wants to buy my junk car,” then you’re right. There are individuals out there who are interested in junk cars. Often, they will take it apart themselves and sell the parts to other buyers.

They might also be automobile aficionados, hobbyists who enjoy pulling apart cars and putting them back together again, or someone with your car model who needs extra parts after a crash that was serious but didn’t total their car.

Because these individuals are looking to resell your car for parts, for a solution to their problem that’s cheaper than going to a mechanic, or want to pursue their hobby, they’re likely to haggle with you. The prices they want to pay will probably be much lower than what you want to sell your car for.

Selling your car privately has additional problems. You have to meet many people which can be exhausting. Many of them will try to pay a lower price than what you’ve agreed on.

You might be communicating with someone who agrees to a fair deal online, only to find that they never show up to pay for the car and then disappear entirely. It’s a hassle and a waste of your time and money.

“What if I Junk My Car?”

If you’ve been thinking, “I want to sell my junk car for cash,” then this is one of the best options out there. No matter what state you’re living in or what state your car is in, junkyards and salvage yards will give cash for cars and cash for junk cars.

Because you can shop around to get the best deal, this is a great way to get the money you need to pay off your car payments. To ensure you go through this process the right way, we’ll review the steps now.

Clean It Out Before Selling

Just because your car has been totaled, that doesn’t mean that there isn’t anything of value in it. If you’re asking yourself, “What’s the first step when I junk my car for money?” the answer is to clean it out before selling. The first thing you want to do is take out anything personal or of high value from the car.

It may seem like we’re stating the obvious, but if you’re in a rush to sell your car or stressed by the whole process of selling it, you might forget to remove expensive items under the car seats, in the trunk, and the glovebox.

Additionally, remember to clear out anything that has personal information on it, such as receipts. Once you’ve done all this, giving your car a good clean can make it a little more appealing to buyers.

Think About the Price

Before you say to yourself, “I’m ready to sell my car,” you should think about the price it will go for. This way, you’re prepared when you go to different junkyards and salvage yards. When thinking about the price, consider factors such as its mileage, overall condition, and make and model.

If there are any big defects or areas that have been irreparably damaged when you totaled your car, be aware of these, too.

Remove Valuable Parts

When junkyards buy junk cars for cash, they’re happy to buy a car with all its components or one that only has some of them. For this reason, we recommend you remove valuable parts yourself that you could make more money from by selling them yourself.

These parts include your GPS, add-on stereo equipment, rims, tires, batteries, windows, doors, fenders, bumpers, your car’s catalytic converter, and its exhaust system.

Do the Right Paperwork

When you do an auto salvage, you also need to do the right paperwork. This includes dealing with the title by locating it so that you can pass it on. Your car’s title includes information such as your vehicle identification number (VIN), year, and its make and model. It will also say if you still owe money on the car.

In addition to locating your car’s title so you can pass it on, you need to cancel your car insurance and remove the license plates from your car. Ensure you do this right before you sell your car since it may be illegal to drive your car around without plates or car insurance.

Shop Around

Once you’ve done all this preparation, we recommend you shop around, going to different junkyards and salvage yards to see what they’ll offer you. You might also want to visit car dealers, but many dealers won’t be interested in a totaled car. By doing this research, you’ll get the best deal for your car.

Trust Your Instincts and Do Your Research

When shopping around, trust your instincts. If something seems fishy to you, or the price is so high that it’s too good to be true, then you should stop negotiating with that buyer. In addition to trusting your instincts, getting word of mouth recommendations on the best junkyards near you can help.

You can also do research online and read reviews to make your decision.

Need More Information?

Do you need more information? Maybe you’re asking yourself, “I know how to junk my car now, but where’s the best place to sell it?” Maybe you want help looking at your car payment budget before deciding which of the options in this article is best for you.

Whatever you need, we’re here to help. At Cash Auto Salvage, we’re experts when it comes to cars, trucks, and SUVs. You can sell your car fast to us too, whether it’s a junk car or in good shape. To learn more about how we can help you, contact us here.

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About the Author


Marc is the Co-Founder of Cash Auto Salvage and Director of daily operations. He retired from a leading Internet Marketing company in 2013 and has been involved in the automotive industry ever since.

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