[lumberjim]

disposable cars.


like a motorcycle helmet. once it;s been cracked or dropped, replace it. the post impacted helmet is weaker than a new one, and unsafe if you should go down again.

the really tricky part of totaling a newer car is that in most cases, people are in negative equity positions until about 4 years into a 5 yr purchase. And with loans going longer and longer as prices rise, the effect is amplified.

If you were to buy a new car, put tax and tags down, and end up financing the invoice amount, you could count on being "upside down" by the time you got home from the dealership.

an example:

you buy a grand cherokee limited for 35000. take the 3500 off for the rebate, and you pay the tax and tags. you're financing 31500. In one year, that jeep is worth about 22-23k. And jeeps are better than most american suv's in holding their value. so, as described in griff's article, the jeep gets totalled.

the insurance company gives you 24K for it, you call for your payoff, and find out that you still owe 28500. you have to pay $4500, and you no longer have a car to get to work in.

don't wreck your car. or let it get stolen

what to do to prevent it?

buy gap insurance. it pays the $4500 in the example above. most policies will cost under $200 for the term of the loan. that usually means about 5 or 6 bucks a month.