Being upside down in a car simply means that you owe more on the car than it is worth. This is very common, especially if you buy a car or truck brand new.
So, if you have a brand new pick up truck that you owe $25,000.00 on, and someone destroys it, what do they owe you? It may be more or less, but it is not necessarily $25,000.00 just because that is what you owe.
Unfortunately, many clients learn the truth about this the hard way.
Tennessee law requires the responsible party to pay no more than the fair market value of the vehicle at the time of the accident.
That means that a fair settlement of your property damage claim may not be enough to pay off your car note.
To prevent having this problem, it is important that when you buy your car, you do everything possible to research the fair market value and also, to pay cash down or seek out the lowest possible finance rate available to you. That is not always the rate that the dealer quotes you. There are many different sources of auto financing available, including your dealer, bank, credit union and online lenders.
Do your homework before buying your car to avoid the difficult situation of being upside down, losing your car in an accident, and still owing thousands of dollars to a lender. And—as I always remind you—carry plenty of car insurance, especially “Uninsured Motorists” coverage.
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