questionscan someone explain this? car loan/insurance…

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(rest of the story)

Contacted the insurance company and an adjuster examined the truck, and immediately wrote them a check made out to them and the credit union (credit union is lien holder until loan is paid) So...they priced out the cost of repairs and took the check to the bank...Loan Officer says "Great! As soon as you make the necessary repairs, bring the truck here and I will give you the full amount as soon as I inspect the truck"

Wait...what!?!? How the frack are they supposed to repair the vehicle if the bank is sitting on the repair check??? Loan Officer did say that he would sign the check over to a repair shop IF they returned with a detailed work order from a licensed Garage, but if they chose to do the repairs themselves they would only get the money AFTER the repairs were made. I'm lost!

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Not the way it's ever worked for me. Insurances pays the repair costs (minus any deductable) and it gets fixed.

Maybe someone thought they would do the repairs themselves. That can be done but the bank isn't involved if that's the case.

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This is standard procedure. Start with the fact that the CU has given you money predicated on collateral (the vehicle) that has a sufficient value to cover the loan. They expect that collateral's value to be maintained, so they generally won't release the funds to you unless you can prove to them that the repair work has been completed and the vehicle's value is now restored. On the other hand, auto repair shops work with this situation all the time and will usually have no problem at all with doing the work and waiting for the CU to release the funds. The repair shop will often contact the CU to verify the payment will be made, but they're all used to working under this process. (This is also why the repair shop will do the repairs for the price the insurance adjustor estimated -- they all know what they're doing, and it's very routine for them.)

[cont'd]

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[cont'd]

Call your CU rep back, tell them this is the first time you've had to do this, and ask for a bit more detailed of an explanation. Tell them your concern, just as you expressed above. If you're going to use a car repair shop (sounds like it, from the extent of the damages), ask them how it works, too.

You'll probably feel more at ease getting "official" answers, but please don't worry at this point. It's new to you, but the other parties involved are all used to working together to get everything done as it should be.

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I've never heard of this happening, but what it sounds like is the credit union is trying to protect themselves from the truck losing value.

I'm not saying this is what you daughter and her husband are doing, but some people could and would take the insurance check, keep the money and then get some random guy on the street to fix the damage. By basically holding the check ransom, the credit union is ensuring that the job gets done right and that the money isn't being wasted on something not car related.

Most repair shops won't mind giving the detailed estimate for body work. That way no one has to pay out of pocket now.

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@purplefeather: Thank you for your comments -- you've hit the nail on the head, so to speak.

If the truck were not being financed, then the owners could do whatever they wanted with the insurance payout, including not getting the vehicle repaired at all. Since the title is still held by the CU, that option doesn't really exist for the borrowers.

I used to have to explain this to our CU members at work with some frequency, since it does sound pretty weird to folks who've never had to deal with the situation before, but [shrug] it really is very commonplace. And no repair shop should even blink an eye at being asked for a work order; that also is standard procedure.

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Thank-you all sooo much! That is what I needed to know. :-) I know it sounds odd, but I've never managed to crash (or damage) one of our vehicles so this whole process is new to us...yes I AM that weird middle-aged lady who has never even had a speeding/parking ticket. LOL And we have always paid cash for our vehicles, never had to deal with a bank loan.

Thanks again for your help and I will let the "kids" know how to proceed.

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Also, don't stress about the "detailed repair order" - if your shop is legit, their repair orders are already detailed - with a breakdown similar to this:

A: Technician inspected and found XYZ problem.
1. Tech did abc to repair xyz problem
1a: Parts used to repair
B: Technician inspected and found ABC problem.
1. Tech did xyz to repair ABC problem
1a: Parts used to repair

If your insurance company OR the CU doesn't like the Repair Order from the shop, the shop can usually speak with them to get it looking the way it needs to. You also have the option of asking your insurance company to recommend a company that they work with for direct repairs.

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@magic cave: You have the best correct answer. I am on the insurance side of things (client based, not company). Glad to see that the info given was spot on.

Also, the repairs for something like this should not be attempted by anyone other than an expert. Definitely not like replacing brakes! That's easy stuff.

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@magic cave: Thank you for providing the CU stance. I had no doubt that you would be the authority there. Happy New Year! :)

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@jimeezlady: I'm glad you feel a bit better about all this. There's really no reason at all that you'd know this stuff unless you'd already had to deal with it before, and it's a good thing not to have needed finance a vehicle, let alone had to do deal with major repair issues.

Personally, I'm always amazed at the breadth and depth of knowledge available around here; we really are a very diverse bunch!

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@jsimsace and @meow57: Thank you for the kind words! As some folks know, I work for (but definitely do NOT speak for) a large credit union, so a lot of money/credit/loan issues are familiar to me. As you've probably noticed, I virtually never make flat, declarative statements (including this one), but tend to use modifying terms such as: generally, normally, usually, as a rule, etc. I speak only from my own experience and training, and there are lots of instances in which a specific situation may require something quite different from my own information.

All that aside, I really appreciate your compliments and @meow57's back-up on my own information. Happy New Year to both of you!