What happens if you're in an accident and your car gets totaled and you still owe money?

So this could happen if you just bought a new car, let's say, and as soon as you drive it off the lot and as let's say, As soon as you drive it off the lot, the car can lose value, sometimes ten to 20%, sometimes more.

And if you tried to sell it, you obviously couldn't sell it for the amount that you purchased it brand new.

So if the car gets in a total wreck, the insurance company is only going to pay you what the market value of the car is, which is what you could sell it for. And that could end up being less than the loan and you could end up owing money.

So how do you protect yourself? Well, there's something called gap insurance, and you may have heard that, and sometimes the dealer recommends that you buy that or your insurance company may recommend you buy it. And that will cover you from the difference of the market value of the car at the time of the crash and how much you owe on the loan. That way, if you do get into a crash and the car is totaled, you don't end up owing money and you have some protection.

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