What Happens if You Total Your Car? How Loan Protection Can Help.

For many people, a vehicle is one of the largest purchases they’ll make. Whether it’s getting to work, taking kids to school, or traveling across Montana, having reliable transportation is essential. But what happens if your vehicle is totaled in an accident shortly after you purchase it?

Unfortunately, it happens more often than people think, and when it does, many borrowers are surprised to learn they may still owe money on their auto loan even after insurance pays out. That’s where loan protection options like Depreciation Protection can make a big difference.

Understanding Vehicle Depreciation

The moment you drive a vehicle off the lot, it begins to lose value. In fact, many vehicles can lose 15 – 20% of their value within the first year.

If your vehicle is declared a total loss due to an accident or other covered event, your insurance company typically pays the current market value of the vehicle—not what you originally paid for it or what you may still owe on your loan. This can leave borrowers responsible for the remaining loan balance.

How Depreciation Protection Helps

Depreciation Protection is designed to help cover the financial gap created by vehicle depreciation. It can provide additional funds if your vehicle is totaled, helping protect your equity and reduce the financial burden during an already stressful time.

Recently, several Montana Credit Union members benefited from having this protection in place.

• One member totaled their vehicle just days after financing it. Because they had Depreciation Protection, they received just over $7,400, money they otherwise would not have received.
• Another member experienced a total loss just two months after purchasing and financing their new vehicle and received an additional $3,500 through their coverage.
• Many of our members have also received thousands of dollars in protection benefits after unexpected vehicle losses.

These examples show how valuable this type of protection can be when the unexpected happens.

Why Protection Matters

No one plans for accidents or unexpected losses, but preparing for them can make a significant difference financially. Loan protection options can help:

✔ Protect your finances if your vehicle is totaled
✔ Reduce or eliminate out-of-pocket costs after insurance pays
✔ Provide peace of mind while paying off your loan

Talk With Your Lender

At Montana Credit Union, our goal is to help members make informed financial decisions. When financing a vehicle, our lenders take the time to explain available protection options so members can choose what works best for their situation. If you’re planning to finance a vehicle or want to learn more about loan protection options, our team is here to help.

Contact Montana Credit Union today to learn more about protecting your vehicle loan, and your financial future.