If Your Car Is Destroyed, Your Insurance Company will Pay Off Your Entire Loan
Myth: If you get in to an accident and your car is destroyed in the process, your car insurance company will pay off the entire loan you took out for your car.
Your car insurance company will pay off the fair market value of your vehicle. The “fair market value” is the original cost of your car. Oftentimes, the balance on oyur car loan will be more than the original cost of your car. So while your car insurance company can help pay a good amount of your car loan, you will still be responsible for paying off the difference.