If your engine blows and you still owe money, you need to assess the car's value vs. the loan, get repair estimates, and contact your lender to discuss options like selling the non-running car (even to a junkyard/breaker), trading it in (rolling negative equity), getting a repair loan, or exploring if warranty/GAP coverage applies, all while remembering you're still responsible for the loan balance until resolved.
If your engine blows but you still owe money, you are still responsible for the loan payments; the lender doesn't care about the car's condition, just the debt, so you must either pay for repairs, find a way to sell or trade it (potentially with a new loan for the repair/shortfall), or risk default, repossession, and owing the lender money even after they sell the scrap vehicle. Options include getting an estimate to fix it, selling it as-is for parts, contacting the lender to discuss options, or even using comprehensive insurance if you have it.
You don't need to talk to the dealership, you need to talk to his finance company. You either need to pay it off, have the estate pay it off and have the executor transfer the title to you, or re-finance it yourself with the executor's permission.
No, standard car insurance generally does not cover engine failure from normal wear, lack of maintenance, or overheating, as these are considered preventable; however, it may cover engine damage if it's caused by a covered peril like a collision, fire, flood, vandalism, or animal damage (with comprehensive coverage), or if you have a separate Mechanical Breakdown Insurance (MBI) policy or extended warranty.
No, standard car insurance generally does not cover engine failure from normal wear, lack of maintenance, or overheating, as these are considered preventable; however, it may cover engine damage if it's caused by a covered peril like a collision, fire, flood, vandalism, or animal damage (with comprehensive coverage), or if you have a separate Mechanical Breakdown Insurance (MBI) policy or extended warranty.
Can I trade in a financed car with a blown engine? It's rarely possible to trade in a financed car with a blown engine. But it's not impossible. Sometimes, dealerships and lenders will accept trades.
When your car is totaled and you still owe money, your insurance pays the lender the car's Actual Cash Value (ACV) (minus deductible); if the loan balance is higher than the ACV, you're responsible for the difference (a "deficiency balance"), but Gap Insurance covers this gap, preventing out-of-pocket costs, so check your policy for gap coverage and contact your insurer and lender immediately.
Believe it or not, your car with a blown engine still has worth. Dealerships might take it as a trade-in. Even junkyards might see it as useful scrap. For a clear answer and peace of mind, try CarBrain.
Repairing an engine is often cheaper upfront, but frequent repairs can add up. On the other hand, replacing an engine has higher initial costs but can be more cost-effective over time due to reduced maintenance needs.
Does car insurance cover mechanical breakdowns? No – car insurance covers you for loss or damage resulting from unforeseen events like accidents and theft, as opposed to mechanical breakdowns due to wear and tear.
Yes, if your car is totaled, the insurance company will pay you the vehicle's Actual Cash Value (ACV) (market value minus deductible), but they usually won't pay off your loan if you owe more than the car is worth; you'll be responsible for the difference unless you have GAP insurance, which covers that "gap" between the payout and the loan balance. The payout goes to you or directly to your lender, and if you have a loan, they will get their share first, potentially leaving you with nothing or even a remaining debt.
Dealing with Negative Equity
Wait to buy another car until you have positive equity in the one you're still paying for. For example, consider paying down your loan faster by making additional, principal-only payments. Sell your car yourself. You might get more for it than what a dealer says it's worth.
If your engine blows but you still owe money, you are still responsible for the loan payments; the lender doesn't care about the car's condition, just the debt, so you must either pay for repairs, find a way to sell or trade it (potentially with a new loan for the repair/shortfall), or risk default, repossession, and owing the lender money even after they sell the scrap vehicle. Options include getting an estimate to fix it, selling it as-is for parts, contacting the lender to discuss options, or even using comprehensive insurance if you have it.
Comprehensive car insurance
For example, if it stops working due to damage caused by an accident, vandalism, theft, or a natural disaster, your policy should cover you. But if your engine fails due to normal wear and tear or a lack of maintenance, you probably won't be able to make a claim.
Replacing an engine can be expensive, often ranging from $2,500 to $4,000. However, this is typically less than the cost of buying a new car. Consider your car's current value. If the cost of a new engine is more than half the value of your car, it might be wiser to invest in a new vehicle.
Some auto repair shops offer financing options to help you afford engine replacement without paying all at once, and you may be able to do the same for the parts you purchase online with monthly instalments.