What happens if your engine blows and you still owe money? (2024)

What happens if your engine blows and you still owe money?

Regardless of the shape of the vehicle, you still owe the finance company money and are obligated to make payments or else they can repossess the vehicle and get a deficiency judgment against you for the difference between what the vehicle sells for at auction (with a blow engine) and the balance of your loan.

What do you do if your engine blows and you still owe money?

What if my car breaks down but I still owe money?

If the car breaks down and can't be driven, you're still on the hook. The vast majority of car loans are just that: loans. The credit union makes the loan in good faith, and you are expected to pay back the money on schedule – regardless of the condition of the vehicle.

What to do if your car dies and you still owe on it?

If you owe more on your loan than your car's value, you will have to pay the difference yourself. You can use your savings or ask your lender to roll over your debt into a new car loan.

Will insurance cover my engine blown?

If you have collision and comprehensive, then your vehicle may be covered if the engine is damaged in an accident or by an event outside of your control. A blown engine that's the result of a mechanical failure or wear and tear won't be covered by comprehensive or collision coverage.

Will a dealership take a car with a bad engine?

As long as you disclose any known issues with your buyer, it's not illegal to trade in a car with problems. In fact, you can't hide much after a dealership inspects your current vehicle and assesses its value.

Does a voluntary repo hurt your credit?

Estimates vary, but you can expect a voluntary repossession to lower your credit score by 50-150 points. How big of a drop you will see depends on factors such as your prior credit history and how many payments you made before the repossession.

Is it smart to trade in a car that isn't paid off?

Trading in a car generally helps you reduce how much you'll need to borrow when buying another vehicle, but if you have a balance on your current auto loan, you may be encouraged to roll your existing balance into a new loan, which will increase your total loan costs and the interest you'll pay over the life of your ...

How do you get rid of a car that you owe more than it's worth?

Refinancing the loan or selling the vehicle are two of the most commonly used ways to deal with negative equity. You may also consider trading in your vehicle for a different car, though that can lead to additional auto loan debt if you're rolling the original loan balance over.

What if my car is worth more than I owe?

If your car is worth more than you owe on it, then you have positive equity and can use that money toward the purchase of your new car. If you owe more than your car is worth, then you'll have to make up the difference with the dealer. It's also possible to trade in a leased car before your lease has come to an end.

Is 72 month car loan bad?

Because of the high interest rates and risk of going upside down, most experts agree that a 72-month loan isn't an ideal choice. Experts recommend that borrowers take out a shorter loan. And for an optimal interest rate, a loan term fewer than 60 months is a better way to go. You can learn more about car loans here.

Will gap insurance cover negative equity?

Do the math on this even if you're buying used — gap insurance for used cars can protect you from negative equity just like it does for new cars. You have a longer financing term for your vehicle: The longer your vehicle is financed, the higher your chance of owing more on the vehicle than it's worth.

When should I refinance my car?

If the interest rate you qualify for today is significantly lower than your current loan rate, it may be a good time to refinance a car. If it's the same or higher, it's probably not the right time to refinance.

How much is my car worth with a blown engine?

The value of a vehicle with engine problems depends on numerous factors including the year, make, model, mileage, condition, location, and more. If your engine blows up on you and you want to sell it, we can pay anywhere from $500 to $10,000 or more depending on what kind of car you have.

What to do with a car with a blown engine?

You could donate your car with a blown engine, sell your car, fix it, or sell it it for scrap metal. We have experience dealing with this problem. If your vehicle has experienced engine failure, it's natural to find what is your car worth. Your car's motor doesn't need to run for you to get fair market value.

What is a fully blown engine?

There is no one way to blow an engine, but it refers to a motor that has suffered catastrophic internal mechanical damage. An engine doesn't actually blow up, even though there may be smoke, steam, or rarely even fire. The damage is so extensive that it affects the majority of the engine parts.

Can you trade a car in with a blown engine?

While a car with a blown engine might now be worth much to you – or anybody else for that matter – most car dealerships will accept it in a trade. With this, you can trade in your car to help pay for a new one. The car dealership will then take your car and either sell it or use it for pieces.

How long does an engine swap take at a dealership?

The time it takes to swap an engine depends a lot on the vehicle and the engine. The job can take from about six hours to 20 hours, depending on the familiarity and the efficiency of the technician(s) doing the work.

Will a dealership install a new engine?

Yes, it's true that some cars receive engine replacements under warranty, which means trained dealership technicians carry out the repairs.

How do I get out of a car loan without ruining my credit?

How many points does a repo drop your credit?

On average, a repossession tends to drop your credit score by about 100 points. However, this drop in your score can range anywhere from 50 points to 150 points based on your current credit history.

Is a voluntary surrender better than a repo?

Is a repo worse than a surrender? Yes, a repossession is typically worse than a voluntary surrender because it shows that the borrower failed to meet their obligations and the lender had to take action to recover the vehicle. This can have a more negative impact on one's credit score and future borrowing opportunities.

Will Carmax trade my car if I still owe money on it?

You can trade in a financed car you still owe money on. However, there are considerations to keep in mind—one of which is whether you're entering the trade-in process with positive or negative equity.

Can I trade in my financed car after 1 year?

You can trade a financed car at any point, but you may want to consider waiting a year or more. This is due to depreciation, which can see a new vehicle drop as much as 20% in value during the first year of ownership. However, if you have negative equity on a vehicle, you can still move forward with a trade.

Can I refinance my car loan?

Can I refinance my car with the same lender? Yes, many lenders will allow you to refinance your existing car loan. Keep in mind that lenders may not offer refinancing as an option. Especially if your vehicle is in poor condition, has low value, or you have few payments remaining on your existing loan.