Can you really use a car insurance check for a down payment?

[abccbrooks]

I was told by a car salesman that if I had a check from the insurance company for what the damage is to my front end of my car that I could use it as a down payment. My husband and I were going to try to trade it in and it has some damage to the front from running over a coyote and also some slight hail damage. I haven't gotten it fixed because I knew my insurance would go sky high. So when he said that I was wondering about it. Has anyone heard of this? Has anyone used this? I am still financing this and when my husband got an insurance check for his truck last year the had to have the work done and then the credit union would sign the check. So how would this work? We can not stand this car and really need something bigger. We are so upside down on this car that we need as much help as possible in the downpayment area. Sorry this is so long. I have been looking for a forum where I could ask this question. I hope someone can help me! Thank you for any information that you can give me. Thanks!

[Rufe]

Your car is still owned by the (bank) note holder.
Any reimbursement for damages is, therefore, also owned by the (bank).
Your Insurance co. requires prompt notification of accidents.
You do not want to get involved in any fraudulent activities.

I suggest you review your loan papers first.

If you owned the car outright, this would be different. (ie: no problem)
However, the insurance (including labor costs), could be used
as extra profit for an auto company that also repairs the car
for less than the claim payment.

I would still not go this route. Try to argue trade-in value independent of this. (either fixed, or as is) You then know exactly how much they will give you for your car.