by familiar1985 » Tue May 11, 2010 09:05 am
I have a car on which i still owe 18k to the bank. I have converted it into a race car so it will never be used on the street in its lifetime. All that is left from original is the chassis and engine. My problem is that im still paying insurance. How can i cancel the insurance? Anyway to explain to the banks the car i purchased from them is a chassis and an engine that will never be on the streets?
Posted: Tue May 11, 2010 04:15 pm Post Subject:
Chances are that you CAN'T get rid of the insurance until the car loan is paid off. When you signed your financing contract, you agreed to protect the lender's interest in the vehicle by maintaining physical damage coverage (auto insurance collision and comprehensive) on the car as long as you still owed money on it.
Turning it into a race car is possibly against the loan agreement; you'll have to look at your loan documents for specifics. Your standard, ordinary car insurance policy won't even come CLOSE to covering this car as a race car... it's specifically excluded from coverage. Period. As well, canceling the current coverage will result in your bank having a problem with you.
Sounds like you may have an issue. I would talk to my agent to see if he has a company that can take care of both angles- the car insurance for the bank and seeing if he can find coverage that will work as a "race car" to achieve the coverage need.
Good luck...you're going to need some help on this one.
InsTeacher 8)
Posted: Wed May 12, 2010 08:05 am Post Subject:
Sounds like you have fundamentally altered the vehicle into something with which the lender would never have agreed. There is likely an "acceleration clause" (no pun intended) somewhere in the loan contract that would allow the lender to call the note if and when it discovers your misdeed. Be prepared for a very difficult situation.
Posted: Wed May 12, 2010 07:08 pm Post Subject:
I have never ever heard of what your saying. I own a tuning shop. I have seen thousands of cars modded. I have purchased and modded many cars. NEVER have i had a problem. I think you are wrong. The bank would definately not be able to use an acceleration clause. Im not even worried about that. I also find it disrespectful that you ignore my questions and atack my actions. I am trying to figure out how to explain to the bank that the insurance does them no good. It is not necessary in this situation and does not protect them from anything. How to explain to bank?
I do not want race car insurance to replace regular insurance. It is too excpensive and not neccessary unless your racing very expensive cars in a series. I am not looking to have my standard coverage cover a race car.
Posted: Wed May 12, 2010 07:21 pm Post Subject:
When you say "canceling the current coverage will result in your bank having a problem with you" What do you mean? That is exactly what i want to do is just cancel the insurance and explain to them that it does no good in this situation for either of us as the race car is not really covered. So basically its covered on paper and not in real life. Are there brains at the bank that i can explain this to or do the papers run the show?
Posted: Wed May 12, 2010 07:57 pm Post Subject: Insurance hike
I have separate auto insurance from my husband and he's not on my policy. He had a violation in 2004. My insurance is going up because of his violation. Is this legal?
Thanks, :?:
Posted: Thu May 13, 2010 05:00 pm Post Subject:
I also find it disrespectful that you ignore my questions and atack my actions.
Who did that? No one attacked you for modifying a street-legal vehicle into one that is no longer street-legal. We attempted to answer your question with sound reasoning. And no one wrote anything condescending or rude, or disrespectful in the least.
The very first post by InsTeacher appeared to answer your question very simply:
Chances are that you CAN'T get rid of the insurance until the car loan is paid off.
How does that qualify as an attack or failure to answer your question, which was:
My problem is that im still paying insurance. How can i cancel the insurance?
Perhaps we should have said, "Of course, you can cancel your insurance any time you want. Just call the insurance company." That would have made you happy, right? But how happy would you have been when your insurance company sends the required cancellation notice to your lender and the lender then added its own coverage and the premium for it to your loan, and said, "If you don't pay this new amount, we will repossess your car"? I'm certain you will find the insurance clause in your loan contract. (And the coverage they add is only for loss due to collision and other-than-collision -- no liability protection at all -- at an exorbitant fee, too.)
Here's the reality of your situation. As Sgt. Joe Friday used to say on Dragnet, "Just the facts, ma'am."
Your lender agreed to advance money to you to purchase a vehicle that could lawfully be operated on any public roadway in the US. As a condition of loaning you the money, the lender required that you maintain sufficient collision & other-than-collision insurance as protection for their economic interest in your vehicle. Fail to provide the insurance, and they promised to do it for you. At your added expense.
If you fail to make the payments on the vehicle, including the added insurance coverage, your lender has the right to repossess the vehicle. If it has been modified in a way that it can no longer be operated on the public roadway, to whom will your lender be able to sell the vehicle? But it cannot collect anything from the insurance policy today, because your vehicle has not been destroyed in a collision. In such a circumstance, you could also expect to be sued by the lender for "destroying" their vehicle (or at least altering it in a way that reduced its economic value to $0).
So, by your own actions, you have fundamentally altered the contractual agreement under which they loaned money to you to buy the vehicle by altering the vehicle in the way you described without their prior consent.
As previously stated, there is likely a clause in your loan contract that gives your lender the right to the immediate repayment of the outstanding loan balance if the vehicle has been altered in a way that prevents it from being used as originally intended (alteration can include your active modification, or a traffic collision). Because you have deliberately altered the vehicle, it would permit the lender to accelerate the loan according to this provision (if it exists, as it probably does).
No one is attacking you, just trying to point out the reality of your situation. Sorry if that's not what you wanted to hear. But please read on . . .
On the other hand, if your lender could prove that you intended to use their money to acquire a vehicle for the purpose of converting it into a race car and did not disclose that to them, and if they would not have loaned the money to you for that purpose, you can be prosecuted for loan fraud. That's a felony in almost all states.
Again, no attack, just another dose of reality.
Does that mean your lender won't agree to allow you to continue making payments? No, they can agree to anything they want. But it's their contract, and you can't force them to do anything contrary to their contract. You can only ask them to agree to alternate terms.
If they say no, you are bound by the terms of the contract you have. Just like they couldn't come to you and say, "Uh, dude, you know the economy? Well, it's like really kind of bad right now, you know, and we need you to double up on your payments so we can loan more money to other people." Your contract is protection for you because it also prevents them from altering most of the terms and conditions without your consent either.
Are there brains at the bank that i can explain this to or do the papers run the show?
Now who's being disrespectful? By "papers" I assume you mean the loan contract. If that's so, then the answer is YES, the paperwork "runs the show". Just ask any judge.
But who agreed to those terms and conditions? You did when you signed the contract -- you got what you wanted at the moment -- a car and other people's money to pay for it. Unless they held a gun to your head, or held your girlfriend or wife or child hostage, to get you to sign, the assumption is that you read and AGREED to all of the terms and conditions in the contract. It says that, in so many words or less, at the place you signed on the dotted line.
So go to the lender and ask what they will permit you to do. If they say, "Repay the loan today or else," you have no other choice. If they say, "Dude! Of course, go ahead and drop your insurance. Just keep sending in those payments," so be it.
Just don't ask us or them, "What if I ruin the race car? Do I still have to pay the loan?"
Posted: Thu May 13, 2010 06:33 pm Post Subject:
I did not find anything teacher said disrespectful just you. your 2nd post was better and more informative although mostly not necessary.
I dont care about all the things you think the lender can/will do. Your making this more complicated then it is. In reality they will either let me take insurance off or not and that is it. Nothing else will happen, guaranteed. I don't know why your trying to fill my head with that nonsense.
"Are there brains at the bank that i can explain this to or do the papers run the show?"
If this is disrespectful to you then you must work at the bank hence why i have gotten nothing out of this post. Instead of figuring out how to make things happen you have been telling me what the bank can do. I will try to talk to the highest person at the banks and explain to them that the insurance does us no good and see where that gets me.
Posted: Thu May 13, 2010 06:43 pm Post Subject:
Thank you for your time.
Posted: Fri May 14, 2010 01:16 am Post Subject:
First, let me say that I don't work for a bank, have never worked for a bank, would never work for a bank, and would prefer it if I was not forced to conduct business through any bank. But our life in the US is inextricably tied to the banks, so I must.
And you must also.
I dont care about all the things you think the lender can/will do. Your making this more complicated then it is. In reality they will either let me take insurance off or not and that is it. Nothing else will happen, guaranteed. I don't know why your trying to fill my head with that nonsense.
I'm sorry you are so resistant to what both InsTeacher and I have tried to communicate to you. And it's not complicated at all. In the words of an attorney, when they haul you into civil court, will something like, "Defendant deliberately and willfully destroyed the property secured by Plaintiff's note, rendering it utterly worthless, without value, and of no use to Plaintiff." (Lawyers like to use redundant terms just to sound important.)
In the financial services world, whether we're talking insurance, loans, investments, or anything else that has to do with OTHER PEOPLE'S MONEY, the people with the money make the rules, and we generally have to abide by them. If we don't like their rules, well, at least we can look elsewhere to see if someone else has rules more to our liking.
Unfortunately, your utter lack of concern about what "the lender can/will do" will be your downfall in all this. It's what gets people crosswise with their mortgages, student loans, credit cards, and, yes, auto loans. You cannot ignore the fact that you and the lender have a binding contract, which obligates you to certain responsibilities (like obtaining insurance to protect the lender's financial interest until the loan is paid off), and which obligates them to certain responsibilities (such as not raising the interest rate whenever they choose, like credit card contracts used to permit until Congress, rightfully, stuck its collective nose into the business of those unsecured loans last year).
The contract, like all contracts, affords both parties some protections, but, obviously, it is usually designed in a way that the party who wrote the contract is the favored party.
That's why there are also rules of law intended to protect those of us who do not write the contracts from the unscrupulous acts of those who do, one of which is called ADHESION, that governs situations when contract language is ambiguous. You read it one way to suit your position, they read it another way to suit theirs, and when the judge or jury agrees that the words can be read both ways, the rule says, "Throw out (or read) the ambiguous words in favor of the party who did not write the contract" so that the contract may be interpreted in favor of the non-writing party as much as possible.
Understand also, that the courts work hard to maintain the validity of contracts, if at all possible, not to invalidate them at the drop of a hat.
Nothing else will happen, guaranteed. I don't know why your trying to fill my head with that nonsense.
Guaranteed? Nonsense? Have you even read your loan contract to know exactly what it says? If you had, you would probably be reciting some of those words here to support your position. But you don't, so I can reasonably assume you haven't read it. (And, admittedly, neither have I, but I have read enough contracts like yours to have a pretty good idea of what's in them, because they are fairly generic, and each time one is challenged, they all get revised to prevent that same challenge from popping up in the future.)
That being the case, just let us know how you fare.
what i want to do is just cancel the insurance and explain to them that it does no good in this situation for either of us as the race car is not really covered
Yes, we understand what YOU want to do. Go ahead, just cancel the insurance. You don't need to ask them if you can do that. In your mind, it does YOU no good to pay money for something that provides you no protection.
And I, and perhaps every other agent on this forum, would generally agree that it makes no sense to pay for something that provides you no benefit. But that's only your side of the story, and you are in the weaker position.
You seem to fail to understand this: as long as you owe your lender $0.01, they will always believe they are exposed to the risk of loss, which they are, and your loan obligates you to protect their interest at your expense. Whether the vehicle can or cannot be driven on the street makes no difference to them or to the law of contracts.
I am trying to figure out how to explain to the bank that the insurance does them no good. It is not necessary in this situation and does not protect them from anything.
Honestly, there is no explanation for what you did, and there is an explanation for what they are going to do. You owe them some $18,000. How do you explain your position that there is nothing to insure? They have a security interest in the vehicle -- which is no longer a vehicle as they understand the term. What protects their financial interest . . . your pledge to repay the loan?
Not good enough. You have taken a perfectly good vehicle and with your own hands turned it into something it was not originally manufactured to do. It might as well be called a doorstop as a race car. That is not what your lender agreed to when it offered you financing.
So if that's the case, they will have the contractual (aka: legal) right to REQUIRE you to pay off the loan -- I guarantee you that concept is discussed somewhere in your loan document -- nothing to insure, nothing left to loan money against. If you don't repay according to their terms, they have the right to repossess the vehicle. If it cannot be sold for what you owe, which it most assuredly cannot according to your description that
All that is left from original is the chassis and engine
you will still owe them the difference between what they get and your $18,000 balance.
You cannot blindly ignore this. To do so is at your own peril.
Nothing else will happen, guaranteed. I don't know why your trying to fill my head with that nonsense.
If you don't like what I'm trying get you to see, ask for a second opinion.
You have put yourself into a corner from which there is little (more likely, no) room for escape. You cannot blame the bank, the car dealer, the insurance company, or anyone else for the difficulty you have created.
Guaranteed.
Posted: Fri May 14, 2010 01:27 am Post Subject:
OP, you have a huge problem here. Using the vehicle in a racing event will almost certainly exclude coverage on your policy. So the coverage you are paying for... won't address any of your loss should you have one. In other words, you are paying money for nothing. If the vehicle is damaged you will need to address the damage and still pay the loan. If the vehicle is totaled you will have loss the vehicle and still pay the loan. All of this while you have been paying for insurance.
I've never heard of an acceleration clause or exclusion but every policy I've heard of contains a exhibition racing exclusion and with what you describe, this will most certainly be cited to deny coverage.
So it's not a question of cancelling the insurance on the vehicle... it's a question of obtaining the proper coverage on the vehicle as required by your loan agreement. You can't get out of not insuring the lien holders interest in the vehicle. You'd be going from a bad situation to a worse one.
I'm not sure how you need to address this. Asking the insurance company would most certainly result in a cancellation of your policy (rightfully so... they should not be collecting a premium for something they know they won't pay out on) and asking the bank might get the car repo'ed (nothing protecting their vehicle and a _huge_ risk that it's going to be totaled).
Perhaps there is some type of insurance policy to cover a race car. You may want to look into this. But again, your current situation is _not_ good.
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