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QuestionInsurance Question  If I have collision coverage on my newly purchased car and I'm financing part of the vehicle's purchase price through a finance company, why does the finance company get paid the full amount of the value of the car if the car gets into a collision? If they get the full amount of the car, I will get nothing meaning whatever I paid for the car will be lost and Ill be empty handed?

AnswerAuto Insurance Answer

Your finance company holds the title to your vehicle until your loan is satisfied. If your vehicle is totaled, the check will most likely be issued in both of your names. Any amount left after your loan is paid would go to you. The insurance company will determine the value of your vehicle at the time of a loss and pay that amount to you and the finance company. Most times as soon as you leave the dealership the value of your vehicle depreciates. So you may be upside down as soon as you leave the lot if you were to get into an accident. In order to protect yourself from that type of loss, you can purchase GAP insurance. This will cover the difference of what you paid for the vehicle and what the actually value is.

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