Been in an accident and your car is a write-off? Don’t worry; we’ve got you covered. Here’s what happens next when your financed car is declared a write-off by your insurance company.

First things first, don’t panic! It’s every driver’s nightmare – you’re out and about, driving along as normal, and, suddenly, you’re involved in a crash. Car accidents are stressful, especially if your vehicle is on finance. Not only are there potential injuries and repair headaches, but what happens if your car is written off? Dealing with insurance companies and a totalled car while still making loan repayments can feel really overwhelming. Let’s clear things up and guide you through what happens next if your financed car is declared a write-off.

What is an Insurance Write-Off?

Are There Different Types of Car Write-Offs?

What Happens if Your Car is Written Off?

How Long Does it Take for my Settlement Figure to be Paid Out?

So, What Happens if you Write Off a Car on Finance?

Do I Still owe Money on my Written-Off Financed Car?

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Hands holding a paper cutout of a car over a wooden desk, suggesting the concept of car insurance or vehicle protection.

What is an Insurance Write-Off?

Insurance companies typically declare a car a write-off in two main scenarios:

  • Repair Costs Exceed Car Value: If fixing the car would cost more than what it’s actually worth, it’s likely considered a write-off.
  • Extensive Damage: Severe damage that makes the car unsafe or impossible to repair will also lead to a write-off decision.

Even if your car seems fixable, it might be a write-off. Insurance companies consider the car’s value before repairs. For instance, if your financed car is worth £5,500 but repairs cost £6,000, it likely becomes a write-off because the total cost (repair + car value) is more than the car’s worth after repairs.

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Are There Different Types of Car Write-Offs?

Yes! Insurance companies use four categories (A,B,S,N) to classify written-off vehicles. Understanding these categories is important, especially if your financed car is involved:

  • Category A – Scrap Only: These cars are so badly damaged that their parts, including salvageable ones, are only good for scrap metal.
  • Category B – Salvage Parts: The car’s body is too damaged to repair and gets crushed, but some parts can be salvaged, sold, and used as spare parts for other vehicles.
  • Category S – Repairable But Unsafe (This used to be called Category C): These cars have sustained severe structural damage and are unsafe to drive on the road until they have been professionally repaired.
  • Category N – Minor Damage, Potentially Undrivable (This used to be called Category D): These cars may have no structural damage but may have cosmetic issues, electrical faults, or non-structural damage to brakes or steering, potentially making them undrivable.

For more details on the different types of write-offs, check out the government’s website here.

Remember: This information is for general guidance. The specific details of your situation will depend on your insurance policy and the severity of the damage to your financed car.

What Happens if Your Car is Written Off?

You can challenge the insurance company’s decisions, but most people accept the settlement offer. The settlement offer is the amount the insurance company pays you for the car, typically based on its pre-accident market value. Once you have accepted the settlement offer, the car’s ownership is transferred to the insurance company, and you’ll be responsible for finding a new vehicle.

However, there is one crucial detail to consider: you still have outstanding finance on the car.

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How Long Does it Take for my Settlement Figure to be Paid Out?

Once you have accepted your settlement figure, your insurance company will work to process your payment. However, the time it takes to receive the money can vary depending on the situation of the write-off and your own insurers’ policies.

So, What Happens if you Write Off a Car on Finance?

Dealing with a written-off financed car involves two key players: your insurance company and your lender. Here’s a breakdown of the process:

  • Informing Your Lender & Outstanding Balance: Contact your lender ASAP. They’ll advise on your options, but remember, the car remains theirs until the loan is settled.
  • Payout Hierarchy: The insurance payout goes towards your outstanding loan balance first. Ideally, it covers the entire amount, but there could be a:
    • Shortfall: You’ll be responsible for the remaining balance.
    • Surplus: If the payout is more than what’s owed, you get the leftover money.
  • DVLA Notification: Don’t forget to inform the DVLA (Driver and Vehicle Licensing Agency) about the write-off to avoid a £1,000 fine.

Remember: This is a general overview. The specifics may vary depending on your individual circumstances and loan agreement.

Do I Still Owe Money on my Written-Off Financed Car?

Yes, you’re generally still responsible for your car finance payments even if your car is written off. This is because the loan agreement is separate from the car’s physical condition.

Here’s why transparency is key:

  • Missed Payments Hurt Your Credit Score: Falling behind on payments can damage your creditworthiness, making it harder and potentially more expensive to borrow money in the future.
  • Honesty is the Best Policy: Keeping your lender informed about the situation allows them to work with you and potentially explore solutions to minimise the financial impact.

By being upfront and communicative, you can navigate this situation more smoothly and potentially reach a more favourable outcome.

Close-ups of new cars in a showroom.

Get Back on the Road Faster: Apply for Car Finance With Marsh Finance Today

A car accident is a stressful experience, but getting back behind the wheel doesn’t have to be a setback, especially when you still have financing on your written-off car.

We understand the urgency of finding a new car, and navigating the complexities of a write-off with a loan can feel overwhelming. That’s where Marsh Finance comes in.

Here’s how we can help you get back on the road quickly and smoothly:

  • Fast & Easy Application: Our streamlined online application takes just 30 seconds to complete.
  • Massive Car Choice: Browse over 80,000 cars across the UK to find your perfect match.
  • Budgeting Made Simple: Use our handy car finance calculator to estimate repayments and find a car that fits your current financial situation.

Don’t let a written-off car stall your life any longer. With Marsh Finance, you can get a free, no-obligation quote in just 30 seconds and get back on the road faster than you might think.

We understand that dealing with a write-off and car finance can be a burden. That’s why we’re here to support you throughout the process. Let’s get you back in the driver’s seat with a car you love and a finance plan that works for you.

Apply today and get moving again!