If your car is written off while on finance, your insurer usually pays the settlement directly to your finance company.
Because the lender legally owns the car until the agreement is settled, they are paid first. If the insurance payout does not cover the remaining finance, you must pay the shortfall. If it exceeds what you owe, you receive the surplus.
First things first, don’t panic! Crashing is 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.
An insurance write-off happens when a car is too badly damaged or too expensive to repair compared to its value.
Your car will be seen as a write-off if one of the following things is true:
It's important to remember: Even if your car looks like it can be fixed, it might still be a write-off. Insurance companies look at the total cost of repairs and the car's value. If the total is more than the car's worth after repairs, it's likely a write-off.
For example: If your car is worth £5,500 but needs £6,000 of repairs, it's probably a write-off. This is because the total cost is more than what the car is worth when fixed.
Written-off cars are placed into categories A, B, S, or N, which determine whether the vehicle can be repaired and how finance is affected.
Yes! Insurance companies use four categories (A,B,S,N) to classify written-off cars. Make sure you understand each category, and make note of which your car falls into.
| Write-Off Category | Can The Car Return To The Road | Finance Outcome |
|
A |
No – must be scrapped |
Finance must be settled in full |
| B |
No – parts only |
Finance must be settled in full |
| S |
Yes, after repair |
Finance must be cleared before buy-back |
| N |
Yes, after repair |
Finance must be cleared before buy-back |
The Government website gives some really good information on the different types of write-off. See their 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.
Once a car is written off, your insurer offers a settlement based on its pre-accident value and takes ownership if you accept.
If you are not happy with the insurance company's decision, you can challenge it. Usually in this position however, most people accept the settlement offer. The settlement offer will basically be what the car was worth pre-accident. Once you have accepted the settlement offer, the car’s ownership is transferred to the insurance company. At this point, you'll have to find a new car.
However, there is one crucial detail to consider: you still have outstanding finance on the car.
A settlement figure is the total amount needed to fully clear your finance agreement at that point in time, excluding future interest.
Settlement payments are usually processed after valuation is agreed, but timescales vary by insurer and circumstances.
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.
When a financed car is written off, the insurer and lender work together to settle the agreement based on the insurance payout.
Dealing with a written-off financed car involves two key players: your insurance company and your lender. Here’s a breakdown of the process:
Remember: This is a general overview. The specifics may vary depending on your individual circumstances and loan agreement.
Yes, you usually must continue making finance payments until the agreement is fully settled, even if the car is written off.
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:
Be upfront and honest. By being clear, you can navigate this situation more smoothly and get to an outcome that is good for you.
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. Figuring out what to do when your loaned car is written-off is tough. This is where Marsh Finance comes in.
Here’s how we can help you get back on the road quickly and smoothly:
Don’t let a written-off car stall your life any longer. With Marsh Finance, you can get a free, no-obligation quote and get back on the road quickly.
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!
A cat s car has sustained serious damage that needs fixing if it's to be driven again. However, if the repairs are made, the car is fit to hit the road. This makes it different from other insurance write off categories, where a repair is not possible and the car is written off. A cat s car is one of the most common insurance write offs.
You can finance a cat s car, as long as the required repairs have been made. If you notice a cat s write off in the past, make sure there's proof of repairs. If everything is documented and correct, you can go ahead with financing the car.
The cat n car category represents a car with minor damage, anything from electrical issues to damaged breaks. This makes the car undriveable but is easy to fix. If the required repairs are made, you are free to get back on the road.
You can! Cat n cars are just cars that have sustained minor damage. Yes, this has made the car undriveable in the past, but provided the repairs are made and well documented, you can choose to finance a cat n car. When it comes to used car finance, it's important to always check the car history, and make sure any past issues have been corrected.
Yes. If you believe the valuation is too low, you can provide evidence of similar vehicles for sale. If you cannot reach agreement, you can escalate the complaint to the Financial Ombudsman Service.
GAP insurance covers the difference between your insurer’s market value payout and the remaining balance on your finance agreement if your car is written off.