Can I maintain a bank loan for a vehicle that is destroyed w/ no insurance?
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Horribly enough, my husband attempted suicide in his truck and the truck burned up and he received horrible burns in the process. If that isn't enough to deal w/ the police said that if we file an insurance claim for the 1.5 y/o truck that they will prosecute him for arson and insurance fraud. So, I have a loan for 3.5 more years. If we maintain possession of the truck and continue to insure it, can the bank call in the loan if they find out? I changed the insurance to storage insurance only which is legal. I don't know if I should come clean w/ the bank and try to get them to refinance it as a signature loan, or if I should just keep quiet. I don't have the $24,000 that is owed on it, and don't have that much equity in my home. I have 2 kids, and can not lose my house. Does anybody have any knowledge on where I stand w/ the bank? We have a very good relationship w/ our bank and we hate to lose it and not have them help us in the future. So don't want to screw them over.
Can I maintain a bank loan for a vehicle that is destroyed w/ no insurance?For most car loans the collateral for the loan is the vehicle itself. Therefore if the vehicle's value drops significantly it will decrease the bank's collateral if you were to stop making payments. This could cause the bank to call the loan.
Honesty is the best policy. Discuss with the bank the situation and try to refinance the loan into another type of lending agreement.
There should be some options available for you.
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