Taking a car on credit can be a great achievement for a person, but doing so in a country where crime rates and car theft are the order of the day can be somewhat risky. What about the finances of those who buy on credit and have the misfortune of becoming part of the car theft statistics?
Car theft in Mexico
During 2017 of 2018, according to AMIS , 50 924 units were stolen, and if we have 2/3 of the cars purchased in this country through financing we can deduce that almost 34,000 people were stripped of a vehicle that perhaps still paid.
What about the finances of those affected?
In theory, the following happens:
When the car is stolen during the first half of the loan term
In this case the debtor owner will be supported by his insurer with the total payment of the value of the vehicle (Let’s clarify, not the total payment of his credit). Money with which the owner must liquidate the total cost of his credit to the automotive or financial institution.
When the car is stolen during the second half of the loan term
In this second case the payment by the insurer depends on the type of insurance that is paid, and the proof of it. That is, if the insurance does not cover vehicle theft, the owner will have lost his car and must pay his financing.
If you have auto insurance that covers theft, the insurer offers you a check for the total amount of the vehicle, less the deductible, and with it the owner must pay the remainder of your debt and perhaps acquire a New credit to acquire another vehicle.
Although it may seem very good that the insurer helps you cover the expense, in practice it does not work as is. Let’s see why:
- Remember that the total cost of your vehicle, if you buy it through financing, will increase between a minimum of 25 to 30%. This amount is not covered by the insurer, since, as such, it is not part of the value of the car. So … When you suffer a robbery, the insurer will only pay you the value of the car and if your credit is recent, it means that you will continue to owe a portion of the total value of the car to the institution that lent you the financing.
For example, your car has a value of $ 190, ooo, being part of financing this value rises to $ 246,000. In case your car is stolen in the first semester, your insurer will only cover the value of the car ($ 190,000) in case you owe even more, this money should come out of your pocket.
In addition, we can add that, after a year of purchase, the vehicle 70% of drivers opt for cheaper insurance without giving much importance to the coverage. Many of them are only covering damages to third parties which leaves the insurer exempt from paying expenses for vehicle theft. In this case, you must pay the total to be liquidated from the financing.