What Happens If My Car Is Written Off And It’s On Finance?

Been in an accident and your car is a write-off? You might be wondering, if my car is written off, how much will I get? Don’t worry; we’ve got you covered. Here’s what happens next when your financed car is declared a write-off.

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.

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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What Is An Insurance Write-Off?

Your car will be seen as a write-off if one of the following things is true:

• Too expensive to repair: If fixing your car costs more than it's worth. At this point your insurance company might decide it's a write-off.
• Too much damage: If your car is badly damaged. Sadly if the car can't be fixed, it will be a write-off.

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.

Are There Different Types of Car Write-Offs?

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.

• Category A – Scrap Only: These cars are the most damaged. Any parts that can be saved, are sadly only good for scrap metal.
• Category B – Salvage Parts: The car’s body is too damaged to repair and gets crushed. Some parts can be saved, sold and used as spare parts for a new car. 
• Category S – Repairable But Unsafe (This used to be called Category C): These cars have got really serious damage and can't be driven. However, when fixed, they can return to the road.
• 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. These issues can include electrical faults, or non-structural damage to brakes or steering, making them undrivable.

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.

What Happens If Your Car Is Written Off?

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.

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 let you know your options but remember, the car is theirs until the loan is settled.
• Payout Hierarchy: The insurance payout goes towards whatever you still owe. 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 let the DVLA (Driver and Vehicle Licensing Agency) know about the write-off. If you don't do this, you can get 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 hurt your image as worthy of credit. This makes it harder and more expensive to borrow money in the future.
• Honesty is the Best Policy: Keep your lender in the loop about what's going on. This allows them to work with you and see what can be done to minimise how much it will cost you.

Be upfront and honest. By being clear, you can navigate this situation more smoothly and get to an outcome that is good for you.

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. 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:

• Fast & Easy Application: Our 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. This can help you work out how much you would have to pay for finance.

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!