Hi,
I'd guess most states have uniform laws on this. Here in California,
the lien holder (who also holds title) gets the first payment, then
the registered owner "gets the crumbs" if any are left after the
lien's satisfied. Title then transfers from the lienholder to the
insurance company. In this case the R/O is out in the cold for all
practical purposes. If the R/O also holds title (no liens), he has to
transfer it to the ins. co. to get paid--at least that's how it was
when my vehicle was stolen. I doubt it's changed.
Rick
That's the way it works here in Wisconsin as well. The insurance co.
pays out fair market value to the lien holder. If there's anything left
after the lien is satisfied the lien holder cuts a check to the R/O.
Sometimes the loan is structured in such a way that for a time the
vehicle is depreciating faster than the R/O is reducing the principal.
If the vehicle is a total loss at that point the R/O not only doesn't get
a dime, they have to finish paying the balance or get their credit rating
trashed. :-(
We have an added twist here. If your stolen car is recovered after the
insurance company has cut a check and you've signed off on the claim it's
usually sold at auction. Licensed buyers only, no retail customers
allowed. Lets say you buy a new car for $19,000 with EZ-Credit super low
payments and a five year note. The car gets stolen a year later. the
lions share of your "low monthly payment" has been covering the interest
and you've only managed to knock $2,000 off the principal. Meanwhile the
first year depeciation is a killer and fair market value on the car is
down to $13,000. You have no wheels and the note holder is telling you
that you still owe them $4,000. Not only that, most notes have fine
print that says if you can't come up with collateral to cover the
balance, the entire amount is due and payable right away.
While you're busy letting the note holder put a lien on your motorcycle
and jetski to cover the loan for a car you no longer own, I'm down at the
city impound putting a $1,300 bid on a $13,000 car they towed in two
months ago. If the insurance company discovers it before the auction
closes I might buy it off their lot. If I get it from the impound they
sell it on a quit claim form I take down to the DMV where they issue a
clean new title in my name with no liens. It may take anything from
cutting a key to replacing the drive train before its ready for resale.
I'll flip it at a dealer auction for $4,500 to $5,500. If you're really
lucky, by the time you're shopping for another car some dealer will be
able to offer you one just like you had, right down to the VIN. If you
can show him you're already making payments on that car you might get the
retail price all the way down to $10,000. Don't bet on it though, most
car salesmen put their heart in the freezer when they leave for work in
the morning.
It isn't how you play the game, It's knowing what game to play.
Later,
Joe
