It’s the nightmare scenario for any new car buyer. You drive it off the lot and a few days later another driver runs a red light, smashing into your car and severely mangling most of the front end and irreparably damaging the frame — essentially totaling the vehicle.
Luckily nobody was injured, but will insurance cover the total loss? Are you expecting the insurer to pay off the loan and you can be on your merry way? That may not always be the case.
Since the other driver was at fault, their insurer will be the one picking up the tab for your vehicle and, as repairing it is out of the question, it will have to pay you for the damage.
But, if you only put a little bit of money down when taking out a loan on the car, you could end up having to pay off at least some part of the loan balance that’s left over after the insurer pays you for your vehicle. New Car Totaled