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Maybe the asphalt on your driveway is starting to break apart and is more rocky than you’d like. Or perhaps you desire a fresh look and smoother experience going down your driveway.

Whatever the reason, giving your driveway a makeover can add to your home’s overall aesthetic and boost its functionality. Research reveals that 79% of Realtors thought a home’s curb appeal was essential to attracting potential buyers.

That said, driveway paving comes with a hefty price tag. According to estimates from HomeAdvisor, the cost depends on the size and materials, but can be anywhere from $2,000 to $10,000, with $6,000 being the average.

Can you finance a driveway if you don’t have the cash on hand to cover the costs? The good news is yes, it’s entirely possible. In order to figure out the best choice for you, you’ll want to be clued in on your options. Here, we’ll walk you through different ways to pay for a new driveway.

Understanding the Cost of Driveway Paving

Tracking home improvement costs? As mentioned, the average cost of driveway paving is $6,000. The main factors that determine how much you’ll be doling out are the size of your driveway and the type of material you’ll be using. As you might expect, different materials require a different investment of time and labor to install.

For instance, while gravel driveways are the least expensive to install, you’ll need to periodically replenish the gravel — ideally, every few years. On the flip side, driveways made of paved stone have the highest costs initially but can last the longest.

Recommended: Personal Loan Guide

Personal Loans for Driveway Financing

Personal loans can be a relatively easy route to financing a driveway paving. Most personal loan amounts range from a few hundred dollars to up to $50,000, while a few lenders have up to $100,000 available.

The terms of the loan repayment can be anywhere from one to seven years, and the APR, which is typically fixed, ranges between 8% and 36%. As of August 2024, the average interest rate on a 24-month personal loan hovered around 12.33%.

Personal loans usually have lower interest rates than credit cards, but the interest can make for an expensive way to borrow. Plus, there might be upfront fees, such as an origination fee, which is usually anywhere from 1% to 6% of your loan amount, and in some cases as high as 10%. While longer loan terms can mean lower monthly payments, you’ll be paying more interest for the loan.

Some lenders feature preapproval online and can offer a speedy application process that you can also do online. Once you’ve been approved for a personal loan, you may be able to receive the proceeds of the loan as soon as within one business day.

However, you should be aware that a personal loan for home improvement is an installment loan, which means you’ll receive the funds upfront and are responsible for making monthly payments from the start. When you apply, lenders do a hard pull on your credit, negatively impacting your credit score.

Home Equity Loans and HELOCs

If you’re a homeowner, you can borrow against the equity in your home to take out a home equity loan or home equity line of credit (HELOC) to finance a driveway paving. Both are second types of mortgage, so you’re betting against your house. Home equity loans and HELOCs can be good ways to borrow money for a relatively low interest rate and lower fees.

Currently, the average interest rate on a home equity loan is 8.35%, and the average national interest rate on a HELOC is 8.69%.

Like a personal loan, a home equity loan is an installment loan, so you’ll receive the proceeds for the loan in a single lump sum. From there, you’ll have a fixed monthly payment for which you’re on the hook.

A HELOC is a type of revolving loan. Like a credit card, you’ll be approved for a limit and borrow as you need, up to the limit, for the draw period, which usually lasts 10 years. You pay as you go, and might be able to make interest-only payments during the draw period. Because a HELOC lets you borrow funds as needed, it could be a better fit for ongoing or multiple home improvement projects with an undetermined total price tag.

Unlike unsecured forms of credit, home equity loans and HELOCs can be easier to approve. That said, both types of loans require a hard pull of your credit, which may temporarily bring down your credit score by a few points. And because you’re putting up your home as collateral, if you put a halt on your payments, you risk foreclosure and losing your home.

Recommended: The Top Home Improvements to Increase Your Home’s Value

Contractor Financing and Payment Plans

Another option for financing driveway paving is to borrow directly from a contractor. Some contractors partner with a third-party lender that provides financing options. These may include same-as-cash options (which we’ll get to in a bit) or monthly payments that you pay back over the length of the loan.

The pluses of getting financing from a contractor are that it’s convenient and straightforward. The contractor may be able to offer you a flexible plan to meet your needs in financing for driveway paving. The approval process might also be quicker.

However, minuses of contractor financing may include higher interest rates. Plus, you’re tied to the contractor should issues arise during the project.

Credit Cards and Same-as-Cash Options

You can also use a credit card. If you don’t want to jump through the hoops of applying for a new home improvement loan and have a hard pull on your credit, you could use a credit card to finance a new driveway.

That said, credit cards typically have higher interest rates than other types of financing, which ratchet up the costs of your home improvement project. Currently, the average interest rate for credit cards is 21.76%.

Contractors may also offer a “same-as-cash” option. Also known as deferred interest financing, these loans feature a no-interest period, usually between three and six months. However, interest will accrue if you don’t pay off your balance when the promotional period ends. Typical interest rates on “same-as-cash” offers range between 25% to 30%, which makes for an expensive purchase.

If you’re considering the same-as-cash option, you might also want to mull over a zero-balance transfer credit card. Interest also doesn’t accrue on purchases until the end of the promotional period, and these credit cards have zero-interest periods that are up to 20 months, so you could have more time to pay it off.

The Takeaway

Figuring out the best option for financing a driveway improvement means knowing what’s available and weighing the pros and cons of each. Before deciding, estimate how much you anticipate spending on your driveway financing and then pore over your options.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

How much does driveway paving typically cost?

It depends on the size of your driveway and the materials used, but driveway paving typically costs anywhere from $2,000 to $10,000, with an average cost of $6,000.

Can I use a home improvement loan for driveway paving?

You can use a home improvement loan for a driveway paving project. You’ll want to look for a loan with the amount needed plus the lowest terms and flexible rates possible.

Are there government programs for driveway improvement financing?

Government home repair assistance programs exist, and you’ll need to check if you qualify for a home improvement loan. Eligibility criteria may include income, age, location, property type, and if you belong to a specific group.

Further, single-family housing repair loans and grants can be available at the state, county, and city levels. You’ll need to check locally to see what’s out there and how to qualify for a loan or grant to spruce up your home.

Photo credit: iStock/irina88w

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL-Q424-005

Today, the term “sunroof” is typically used to refer to any panel or window in the roof of a vehicle that may pop up or slide open to allow air to circulate inside the cabin. A moonroof is a type of sunroof that features a stationary glass panel. There are many different sizes, shapes, and styles of sunroofs.

If you’re deciding which one to choose for a new car, we’ll share the differences and the pros and cons of each.

What Is a Sunroof?

“Sunroof” has become a generic term for any panel or window in a car’s roof. More specifically, a sunroof is usually a panel located on the top of a vehicle that slides back to reveal a window or opening in the roof. The panel is usually opaque, matching the vehicle’s body color. It can be electric or manual.

Sunroofs can come in sliding or pop-up versions. Sometimes, a sunroof’s panel can be completely removed.

What Is a Moonroof?

“Moonroof” is a term introduced in 1973 by a marketing manager at Ford. A moonroof is a type of sunroof, made of transparent glass. It may be stationary or slide back, but can’t be removed. New cars typically have moonroofs instead of sunroofs.

A “lamella” moonroof has multiple glass panels that slide back and provide a scenic view. A panoramic moonroof has fixed glass panels that cover most of the vehicle’s roof and extend to the backseat.

Moonroof vs Sunroof Differences

As mentioned above, a sunroof is typically a painted metal panel that blends into the rest of the car roof and that slides open or can be removed. A moonroof is essentially a window in the roof, whose glass panel may or may not slide open.

Pros and Cons of a Sunroof

Pros and Cons of a Moonroof

Because a moonroof is a type of sunroof, most of the sunroof pros and cons above also apply to moonroofs. However, there are a few additional considerations:

Safety Considerations for Sunroofs and Moonroofs

As mentioned, it can be tempting to reach through or stand up in a vehicle with a sunroof or moonroof. For safety reasons, once the car is turned on, the driver and passengers should be seated and buckled.

Sunroofs and moonroofs also make a car more susceptible to break-ins, since there’s one more entry point for thieves to smash or pry open.

In case of a collision, there is additional risk of glass shattering, which can cause injury.

Recommended: How Much Does Car Insurance Go Up After an Accident?

Maintaining a Sunroof or Moonroof

As with any car feature, regular maintenance of your sunroof is recommended. And knowing how to DIY can help you save money on car maintenance. Mostly, that means keeping it clean. Here’s how:

1.    First, use a hand brush to sweep debris off the roof.

2.    Wipe down moving parts with a microfiber cloth.

3.    Clean the glass with a product without ammonia or vinegar.

4.    Lubricate moving parts with a lightweight automotive grease or WD-40.

How to Choose: Sunroof or Moonroof

When deciding between a moonroof and sunroof, consider your area’s climate and how much use you expect to get from the feature. It can also be helpful to ask friends or family who have experience with one or the other style for their opinions.

If money is a concern, a sunroof will cost $1,000-$1,500 more in a new car. Not having a sunroof can also help lower your auto insurance premiums.

In the end, it comes down to personal preference.

Recommended: How to Lower Car Insurance

The Takeaway

A sunroof refers to any opening or window in a car roof. A moonroof is a type of sunroof that usually features a stationary glass panel. There are many types, sizes, and styles of sunroofs, from electric to manual, pop-up to removable. Sunroofs will cost more upfront and possibly in maintenance fees and insurance. However, drivers and passengers will enjoy better light and air circulation, even without the air conditioner.

When you’re ready to shop for auto insurance, SoFi can help. Our online auto insurance comparison tool lets you see quotes from a network of top insurance providers within minutes, saving you time and hassle.

FAQ

Is a moonroof better than a sunroof?

Moonroofs do have advantages over sunroofs, including a lack of mechanical parts that require regular maintenance and can break down. Otherwise, it’s a matter of personal preference.

What are the disadvantages of a sunroof car?

A sunroof adds to the cost of the vehicle and likely to your insurance premiums. Sunroofs also make a car more vulnerable to break-ins and break-downs of mechanical parts.

Photo credit: iStock/AscentXmedia

Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.


Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPRO-Q424-006

If your car is totaled in an accident, you may expect the insurance payment to come to you as the car’s owner. Not necessarily. If you financed or leased your car, the insurance company will make sure the lender or leaseholder is paid first. You’ll receive whatever remains of the settlement — if anything.

Read on for a breakdown of how the insurance claims process works and who gets the insurance check when a car is totaled.

Getting an Insurance Check for a Totaled Car

Unless your totaled car was only a few months old, or you have new-car replacement coverage, the check you receive from the insurance company probably won’t be enough to replace it with a brand-new model.

If your car is financed or leased, as noted above, the insurance company will first pay off the lender or leaseholder. The car’s owner will receive a check only if any funds remain after the car is paid off.

If you’re not sure what would happen if your car was totaled, it might be time for a personal insurance planning session to review your coverage.

Recommended: Does Auto Insurance Roadside Assistance Cover Keys Locked in a Car?

What Happens If Your Car Is Totaled in an Accident?

After an accident, your insurance company will assign an adjuster to assess your car and estimate the cost of repairs. If the estimated cost of fixing the car is more than the car’s market value, the insurance company may declare it a “total loss.” The same thing may happen if the insurance company determines the car may not be safe to drive even if it were fixed.

How Your Car’s Value Is Determined

The insurance company will determine your car’s “actual cash value” based on its pre-crash condition and what similar models are selling for in your area. They’ll also factor in things like the car’s age, wear and tear (inside and out), mileage, and any optional equipment you’ve added. (You can learn more about the lingo discussed here in our guide to car insurance terms.)

Recommended: How to Get Car Insurance

What If the Accident Wasn’t Your Fault?

If another insured driver is found at-fault for the accident that damaged your car, that person’s insurance should pay the claim — and your insurance deductible won’t come into play.

However, you should expect to pay your deductible amount if:

•   You’re responsible for an accident.

•   The fault is shared.

•   No one is at-fault for the damage to your vehicle. For example, a tree branch or other debris hits your car in a storm.

•   The driver who caused the accident is uninsured or underinsured, and your uninsured motorist coverage pays your claim.

Is a Car Totaled When the Airbags Deploy?

The cost of replacing activated airbags will be considered in the overall cost of repairing your damaged vehicle. However, a vehicle won’t necessarily be declared totaled because the airbags deployed.

Who Decides If Your Car Is Totaled?

People often use the word “totaled” as a general description for a car that’s been badly damaged. But only your insurance company can decide a car is totaled based on its value and the cost of repairs.

What Types of Coverage Will Pay for a Totaled Car?

Drivers are often more concerned about the cost of their monthly premiums than with how much car insurance they really need. But not all types of coverage will pay for a totaled car.

After an accident, you’ll need one of the following policies — which should be available from both traditional and online insurance companies — to be reimbursed for a totaled car.

Collision

Collision coverage pays for damage to your vehicle or property. That can include damage caused by crashing into another vehicle or running off the road and into a tree or fence. Even if you’re responsible for the accident, collision coverage will pay for the repairs, minus the deductible amount you’ve chosen.

Comprehensive

Comprehensive coverage pays for losses caused by something other than a collision, such as a weather event, hitting an animal, theft, or vandalism.

Property Damage Liability

Property damage liability coverage pays for damage to your vehicle (and other property) if you’re in an accident and the other driver is found to be at fault.

Uninsured / Underinsured Motorist

If you’re in an accident and the other driver is at fault but isn’t insured or doesn’t have sufficient auto insurance, uninsured motorist coverage pays for your repairs.

New-Car Replacement

With new-car replacement coverage, if your car is totaled, your insurer will pay to replace it with a brand-new car of the same make and model (minus your deductible).

Gap Coverage

If you owe more on your car loan or lease than what your insurance company says your damaged car is worth, you could end up having to make up the difference. Gap insurance can bridge the gap between your settlement and what you still owe.

Rental Reimbursement

Unless you have a backup vehicle to use until you replace your totaled car, you may have to rent a car. If your auto policy includes rental reimbursement coverage, your insurer may refund your out-of-pocket costs for the rental, but only for a limited time.

Do You Still Have to Make Loan Payments on a Totaled Car?

Even if your vehicle has been declared a total loss, your lender will likely expect you to keep making timely loan payments until the claim is settled. (If you don’t, that can hurt your credit.) So it’s a good idea to stay on top of any paperwork, and to check in with your insurance company and lender regularly to be sure the claims process is on track.

What If the Insurance Payment Isn’t Enough to Pay Off Your Loan?

Unless you have gap coverage, the settlement you receive may not be enough to pay off your loan or lease. Insurers are required to pay only what a totaled car was worth before it was damaged. So if your car’s actual cash value is less than what you owe the lender — or less than the payoff amount on your lease — you can end up having to make up the difference out of pocket.

If you research what your car was worth and think your settlement amount is too low, you can try to negotiate a higher amount. The insurer may ask you to provide documentation that proves the car was worth more than they’re offering, so be ready to round up photos of the car, maintenance receipts, and other paperwork that backs up your position.

You can also research comparable cars in your area. You may even want to hire a private appraiser to get a second opinion. If you think it will help, you might consider hiring an attorney.

Do Insurance Rates Increase After a Car Is Totaled?

Each insurance company has its own policy that determines whether a driver’s rates will increase after an accident. The decision may depend on who was at fault, your driving record, whether you’re a longtime customer or new driver, and other factors.

If you decide to shop for lower insurance rates to save money, keep in mind that you may have to answer questions about prior claims and accidents.

The Takeaway

When a car is so badly damaged that fixing it would cost more than it’s worth, the insurer may decide it’s totaled. That means instead of repairing it, the insurance company will pay the owner the car’s actual cash value, based on its condition just prior to the accident.

If you own your car outright, the payment will come to you. If the car is financed and you’re still making payments, the insurer will make sure the lender is paid first. After that, you’ll get what’s left of the settlement. Either way, you can end up short of what you’ll need to replace your damaged vehicle.

When you’re ready to shop for auto insurance, SoFi can help. Our online auto insurance comparison tool lets you see quotes from a network of top insurance providers within minutes, saving you time and hassle.

FAQ

If my car is totaled, will the insurance company send me a check?

If you own the car, the settlement payment will go directly to you. When the car is financed, the lender will be paid first, and you’ll receive what’s left of the settlement.

Can I keep the money from the insurance claim?

If you owned the car that was totaled, you probably can use the insurance settlement for anything you like. But if the car was financed, the insurance company will make sure you pay off what you owe.

Photo credit: iStock/rocketegg

Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .


Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPRO-Q424-005

With typical driving, a car battery usually has a lifespan of three years of trouble-free driving. At that point, you might need to charge it. But what if you park the car and just let it sit? In that case, how long does a car battery last without driving or charging?

This post will take you through a variety of scenarios to help you gauge how often you might need to start up a car in order to preserve the battery life.

How Long a Car Battery Lasts Without Driving

Although no two vehicles or batteries are exactly the same, estimates can be made. So if you’re wondering how long a car battery typically lasts when the vehicle sits idle, here are some broad averages.

First, it’s strange but true: Although many things wear down with use, a car’s battery can “die” within a couple of months if it’s not used. Here’s why: Your car battery takes chemical energy and transforms it into electrical energy when you start the ignition. That electricity then powers the radio, clock, and other accessories.

When you park your car for an extended period, the battery can go dead — meaning, not operate without a charge — as quickly as in two months’ time.

As for how long an electric car battery lasts, the answer is about the same. Electric cars are fueled solely by electricity stored in the battery. Teslas, for example, are all-electric. If the battery is in good shape and fully charged, it might take a month or two to lose power.

Then there are hybrid cars, which are fueled by a combination of electricity and gasoline. How long a hybrid car battery lasts when not in use depends on the battery. Vehicles with 12-volt batteries may drain more quickly than other kinds — in as little as one month. See your owner’s manual for guidance.

Recommended: Does Auto Insurance Roadside Assistance Cover Keys Locked in a Car?

What Can Drain a Car Battery When the Car Is Off?

Older batteries won’t hold their charge as long as new ones. But there are many other reasons for a battery to “drain” faster:

•   Electrical problems, such as bad cables, blown fuses, spark plugs

•   Corrosion on the battery

•   Alternator problems

•   The charging system itself

If you suspect one of these issues, see our advice on saving on car maintenance costs.

How to Save a Car Battery When Not in Use

As noted, using your car allows it to convert chemical energy into electrical energy. If your car will be sitting idle for a while, it’s a good idea to take it out for a 15-minute drive once a week to allow the battery to recharge.

Simply turning the ignition on and off is not enough. This sort of usage may cause more harm than good. If you’ve got more than one vehicle at home and use one as your primary vehicle, consider using the secondary vehicle more often.

Recommended: How to Lower Your Car Insurance

How to Keep a Car Battery Charged When Not in Use

Consider using a “trickle charger.” These devices, which are attached to the car long-term, recharge the battery at the same rate it typically drains. There are different types of chargers that can be left connected to your vehicle for varying lengths of time. Make sure you get the type that’s appropriate to your car model and you understand how it should be used.

Steps to Take if a Car Battery Is Dead

If you accidentally leave the lights on (or some other accessory), you probably just need to juice up the battery again.

When there’s no obvious reason that the battery is drained, check for corrosion on the terminals that connect the car battery to the charging system. If you see white deposits, try brushing the ashy material off with a wire brush and baking soda.

If the first two scenarios don’t apply, you may have a defective battery. The problem can also be other faulty or worn-down parts, such as a battery cable, terminals, or alternator. In that case, you’ll need the parts repaired or replaced.

How Much Replacing a Car Battery Costs

If you’re going the DIY route, a new battery can cost between $100-$200. If you’re going to hire a mechanic to have the work done, it may cost an additional $45 to $250, depending on the make and model and the mechanic’s pricing.

Battery replacement — and other car maintenance costs — aren’t covered by insurance. Find more insurance tips for first-time drivers.

How to Jumpstart Your Car With Cables

When you jumpstart your car, you use the power from another car battery to give yours a “jump” and allow it to operate again. If a jumpstart doesn’t work, then it’s more than likely you need a new battery.

First, park the two cars close together, turn them both off, and open the hoods. Take out your jumper cables and untangle them. Hook the red/positive clamp to the positive terminal of the battery that needs a charge. Then attach it to the working battery’s positive terminal, using the red/positive clamp.

Take the black/negative clamp and connect it to the negative terminal of the working battery. Attach the other black/negative cable end to a surface on the car with the dead battery — somewhere that’s metal and unpainted.

Start the working car, then see if the other car will also start. Turn off the working/jumper vehicle. Carefully remove the cables in the reverse order that you attached them. Let the car with the newly charged battery run for at least fifteen minutes.

Some insurance policies cover jumpstarts as part of their roadside assistance option. When deciding how much car insurance you need, weigh the cost of this extra against the added convenience.

How long the battery charge lasts can vary. If it goes dead again, have your battery checked out to see if it needs to be replaced.

How to Know When a Car Needs a New Battery

Here are some signs that your car battery may need to be replaced:

•  The battery no longer holds a charge for long.

•  Your car isn’t starting as easily as it used to or shuts down after starting.

•  The battery smells bad.

•  The battery case is swollen or bulging.

•  It’s been a while since your battery has been replaced. (A good rule of thumb is to refresh yours every three to five years.)

Car Insurance Resources

As mentioned above, some car insurance policies offer roadside assistance options. The next time you’re sitting down for a personal insurance planning session, consider the pros and cons of these kinds of extras.

To find the best rates you’re eligible for, shop around on an online insurance marketplace.

The Takeaway

How long a typical car battery lasts depends on how often you drive or charge it, how old the battery is, the type of battery, and more. A new car battery should last about four years on average. The cost of a new battery can be as little as $100 if you replace it yourself. Otherwise, a mechanic may charge you hundreds more. Keeping your battery free of corrosion may extend its life and protect your investment.

When you’re ready to shop for auto insurance, SoFi can help. Our online auto insurance comparison tool lets you see quotes from a network of top insurance providers within minutes, saving you time and hassle.

FAQ

How long does a car battery last without charging?

A car battery can last around four years if you’re regularly using the car. If you leave lights on or park the car for an extended period, then it may need charging before you can drive it. A “trickle charger” can help maintain the battery in a car that’s in storage.

How often do you need to start your car to keep the battery from dying?

A car battery can often stay in good shape for a month even when you don’t drive the vehicle. However, if you want to make sure the car is ready to use in case of an emergency, take it for a 15-minute drive once a week.

How long can a car last on just the battery?

If your alternator fails when you’re on the road, you may still be able to drive on just the battery. The amount of time you have before your car dies depends on a number of factors, including how much charge your battery has. Of course, it’s best to get the alternator repaired or replaced as soon as you can.

Photo credit: iStock/Fernando rodriguez novoa

Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.


Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOPRO-Q424-003

A car is typically considered totaled when the insurance company determines it will cost more to repair than the vehicle is worth. Beyond that, states have their own guidelines for when a car should be declared totaled. That guideline is called the “total loss threshold.”

Learn more about the different thresholds for totaled cars in each state, and what to do if your car is totaled in an accident.

What Is a Totaled Car?

A totaled car, according to insurance companies, costs more to repair than its current book value. An insurance company can also declare a car totaled when the vehicle may be unsafe to drive even after repairs are complete.

Not all damage is the result of a crash. Vehicles that are caught in a flood usually sustain so much damage that it’s common for a flooded car to be deemed a total loss.

What Insurance Covers When a Car Is Totaled

If your car has been damaged, you may wonder how much it’s worth. When an insurer considers a car to be totaled, they reimburse the owner for the “actual cash value,” or ACV. That is the amount the car was worth right before the crash or incident.

The ACV is not the same as what you paid for the car. That’s because the original purchase price is reduced over time by depreciation. The ACV is also typically less than what it will cost to replace the car, known as replacement value.

How Is a Totaled Car’s Value Determined?

As mentioned above, insurance online insurance companies evaluate totaled cars based on their condition and mileage just before the accident or incident. Other factors include make and model, age, and where you live.

What Is a Total Loss Threshold?

An insurance company may consider a car totaled even when repair costs are less than its ACV — sometimes quite a bit less. That’s because when a damaged car is assessed, the insurance adjuster is limited to a superficial visual inspection. It’s recognized that more damage is often uncovered during the repair process, as the mechanic takes a close look at hidden components. (By the way, some drivers might find this rundown of car insurance terms helpful.)

The total loss threshold is a set percentage of the ACV where a vehicle is still considered totaled. Each state sets its own percentage; the threshold for Alabama, for example, is 75%. Insurance companies may use a lower percentage, but they must meet the state’s minimum.

Total Loss Threshold by State

You can find your state’s total loss threshold in the table below. For states that use the “total loss formula,” the threshold is set as the vehicle’s fair market value less its salvage value.

Recommended: Insurance Tips for First-Time Drivers

Steps to Take When Your Car Is Totaled

After an accident, you probably know to call the police and then alert your insurance company as soon as possible. But then what? Here are the steps.

1. File a Claim

Filing a police report is not enough. You must contact your insurance company separately. Do so as soon after the accident as possible so they can begin working on your claim. You can also find out how much your insurance may go up after the accident if you’re found at fault.

If you’re without a vehicle, you may be interested in learning the cheapest way to rent a car.

2. Assess the Damage

Your insurance company may direct you to one of their approved body shops for a review of the vehicle and its damage. If you have your own trusted body shop, ask the insurer if you can take it there. As long as the estimate seems reasonable, then the insurer should accept it.

3. Know Your Car’s Fair Market Value

You can use sources like Kelley Blue Book (KBB.com) and Edmunds True Value (Edmunds.com) to look up your car’s value. Just enter the make, model, and year. (Users of SoFi’s Financial Insights app also have access to our Auto Tracker.)

Besides online research, you can work with a dealership to get an estimate. No matter which route you go, this is important information to have because it will give you an idea of how much your insurer may pay for your car.

4. Contact Your Lender

If you owe money on the totaled vehicle, let your lender know about the accident. Your insurer will either pay off the lender directly (if you receive enough funds to cover the balance) or write a check for you to forward to the lender. If you receive more for the totaled vehicle than you owe, then the balance beyond the loan amount goes to you.

If you have a gap insurance policy on the totaled car, that will pay off your lender if your insurance reimbursement doesn’t cover all that you owe on the vehicle.

5. Negotiate the Claim With the Insurer

Depending on who is at fault, you may or may not need to pay your insurance deductible. If your insurance assessment feels off, you may want to negotiate the ACV or the cost of repairs.

If your negotiations are fruitless, switching car insurance is always an option. You can also contact your state’s department for insurance for help.

6. Shop for a New Car

It can take two to four weeks to get a check. States usually provide time frames in which a claim should be processed. Your insurance company can also give you an estimate on their typical processing time.

Pros and Cons of Keeping a Totaled Car

Sometimes, a totaled car’s owner may want to hold onto it. This is known as an “owner-retainer option.” In this case, the insurance company will typically reimburse the owner the amount owed minus the salvage value.

The owner can take the payout and repair the vehicle to a drivable condition, which will likely cost less than buying a replacement vehicle. The downside is that the owner gets less cash and will need to get car insurance for the old vehicle, which can become a more expensive proposition than simply taking the cash. The owner may also keep the car and not fix it — or partially fix it — assuming that it’s drivable.

The owner can then sell the vehicle, perhaps to a salvage yard or other drivers for parts. You may end up getting more money than the insurance company would pay out. However, this isn’t guaranteed. Instead, you can end up with less money and more work.

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Tips for What To Do if Your Car Is a Total Loss

These three tips can make the process easier.

•   Gather your loan paperwork (if applicable), car title, and maintenance receipts to have all the information you may need at hand.

•   Remove personal belongings, such as phone chargers and sunglasses, from the vehicle. In most states, you’ll need to give the state DMV your license plate. In some states, you can keep the plates and put them on your replacement car.

•   Consider whether donating the car is a good option. You may be able to claim a tax deduction for your good deed (keep your receipt), but you won’t get the funds you would from selling the car.

The Takeaway

A car is considered totaled when the insurance company determines it will cost more to repair than the vehicle is worth. However, insurance companies often pick a figure that’s considerably lower than the vehicle’s actual cash value, because more damage is typically found once repairs have begun. That amount is called the “total loss threshold.” The legal threshold varies by state, but is typically between 60% and 100 of a vehicle’s value.

When you’re ready to shop for auto insurance, SoFi can help. Our online auto insurance comparison tool lets you see quotes from a network of top insurance providers within minutes, saving you time and hassle.

FAQ

What is the percentage before a car is considered totaled?

You’re referring to the “total loss threshold.” After an accident, if repairing a damaged car will cost close to its actual cash value — say, 75% or more — then the insurer may consider the car totaled. This threshold varies by state but is typically 60% to 100%.

What is the total loss threshold for GA?

Georgia is a Total Loss Formula state. That means that a car is considered totaled if the cost of repairs equals the vehicle’s fair market value minus its salvage value.

What is the threshold for totaling a car?

It depends upon the state where the accident occurs and your insurance policy. Most state thresholds are 60% to 100% of a car’s value. Insurance company thresholds may be lower, but by law cannot be higher.

Photo credit: iStock/Pakhnyushchyy

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Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.


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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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