"In the event an automotive loan customer/co-buyer/co-lessee passes away," says Tony Sapienza, a Global Communications Manager for GMAC, Chrysler's auto lender, "The first step is that GMAC will ask that the family or Power of Attorney provide us with a copy of the Power of Attorney and death certificate. We also advise family or POA for the customer to continue making payments on the vehicle as they communicate with us how they'd like to proceed."
Sapienza says heirs aren't officially on the hook to foot the balance of the loan.
"There are several options," said Sapienza. "[This includes the] payoff of the vehicle, the family assuming payments if they so desire or the family voluntarily surrendering the vehicle if they determine they do not need or can't afford it."
Of course, finance companies being finance companies, none of the proffered options include a hug and a softly spoken, "Money isn't everything. Take a month to think about it and call us when you're ready---we know this is a difficult time for you."
Justin Leach, a spokesperson for Toyota Financial Services, explains how an estate can ultimately be responsible.
"If the family wants to keep the vehicle, they can continue, of course, to make the car payments," Leach said. "If they don't want it, they can return it, we'll sell the vehicle at auction and apply the proceeds against what's owed. If they owed $12,000 and we sell it for $10,000, for example, one of our probate attorneys will bill the estate for the balance."
Leach recommends planning ahead.
"At the time of purchase, some customers will get Credit Life Disability Insurance, which takes care of outstanding balances," he said. "They pay it off in the event of a death and you get to keep the car. It obviously depends on what the family wants to do, but it isn't too complicated, really---keep it or return it. Hopefully they've bought good insurance and it takes care of it for them."
Leach also notes current policies have changed with the times.
"Some time ago you could just bring a car back," he said. "And some companies would just eat the difference and not go after the difference in court. It's not like that anymore."
Insurance payments have to be thought of as well.
"If an insured dies, coverage will be provided until the end of the policy period for anyone covered under the policy at the time of the insureds," said Krissy Posey, an Allstate spokesperson. "A spouse has a duty to notify us whenever someone on the policy needs to be removed, and if a friend is acting as the insured's legal representative, he/she may be covered under the policy until the end of the premium period."
Final (ahem) word? Plan ahead for your own eventual destination.
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