What happens if your financed car is stolen?
Having your financed car stolen is a stressful situation no one wants to find themselves in. But, if it does happen, it’s important to know what happens next.
So, what happens if your car gets stolen on finance? Try not to panic; there’s a process you can follow, and support available. Whether you’ve got it through PCP (Personal Contract Purchase) or HP (Hire Purchase), we’ve covered everything you need to know, including who to call first, what happens to your finance agreement, and how you could protect yourself in the future.
Step 1 - Report The Theft Immediately
If your financed car is stolen, it’s a good idea to act quickly. Here’s what to do first:
Call the police – First things first, report the theft straight away and get a crime reference number. This is your proof that the car has been stolen, and you may need it for your insurance claim.
Tell your insurance company – Once you’ve spoken to the police and have the crime reference number, notify your insurer. They’ll start the claims process and explain what happens next. This impacts what happens if your car is stolen and it’s on finance, as your lender will still need to be paid. But your insurance payout may take care of this.
Inform your finance company – On a car finance agreement, the car isn’t yours until you’ve paid the last payment, so the lender needs to know it’s been stolen. They’ll need to be in contact with your insurer about the payout.
Step 2 - What Happens With Your Finance Agreement?
When your car on finance is stolen, your finance agreement still needs to be paid. So, here’s what might happen:
Your insurance provider values the car and pays out its market worth.
That payout usually goes straight to your finance company to clear the balance on your loan.
If the payout matches what you owe, the contract is ended and you don’t owe any more.
But if the payout falls short, things could get a bit trickier.
What If the Insurance Doesn’t Cover the Full Value?
Cars lose value quickly, especially new ones. Sometimes that means the insurance payout doesn’t cover the full amount you still owe on your car finance agreement. If this happens, you may still be responsible for paying that shortfall even though you don’t have the car anymore.
This situation is called negative equity, and it could mean you have to pay a significant sum yourself. But there are ways to help protect yourself from this scenario happening. GAP insurance (Guaranteed Asset Protection) is designed to cover that shortfall between the insurance payout and the balance you owe.
If you’re worried about what happens if your car on finance gets stolen and you’re left with negative equity, GAP insurance could stop you from being out of pocket.
Can the Finance Company Report a Car Stolen?
Normally, it’s down to you to call the police and report the theft. Your finance company doesn’t do it for you.
The only time they might step in is if:
The car was fraudulently obtained
The car was repossessed but not returned
So, unless it’s a special legal case, the finance company won’t report the car stolen on your behalf, it’s down to you to follow step one.
What Are Your Options After a Stolen Car Payout?
Once the insurance money has been sorted and sent to your finance company, you’ll probably be wondering what happens next and what your options are.
Can you use the payout to settle finance?
Yes, this is usually what happens. The payout goes directly to your lender, and if it clears your balance, the agreement is over. If there’s still money left to pay, that’s when you’ll need to step in and cover the shortfall.
Will you need to apply for a new agreement?
If your existing loan is settled with the insurance payout, you might be wondering how to get another car. In this position, you might want to start fresh with a new finance application. Your lender will check your credit score and affordability again before approving anything new.
How to finance a replacement vehicle
If you are eligible for car finance again, you may want to consider which type suits you now. At Car Finance 247, we could offer two different types of car finance:
Hire Purchase (HP) – With HP, you spread the cost of the car across fixed monthly payments, plus interest. Once you’ve made the final payment, the car is all yours. This might be a good choice if you know you want to own the car at the end.
Personal Contract Purchase (PCP) – PCP works in a similar way. But, at the end, you can choose to hand it back, swap it for another, or pay a big lump sum called a “balloon payment” to keep it. This could be a good option if you want the flexibility to decide at the end.
How Could You Protect Yourself In The Future?
Having your car stolen once is bad enough, nobody wants to go through it again! You can’t always stop thieves, but you can take steps to try and make it harder for them and protect yourself financially.
Two options you may want to consider are:
GAP insurance – If your car is stolen again, GAP insurance helps make sure you’re not left paying off a finance balance that your insurance payout doesn’t fully cover. It could cover the shortfall so you’re not out of pocket. If you want peace of mind, it may be worth considering.
A tracker – A tracker gives you a better chance of getting your car back if it’s stolen. It’s a small device hidden inside your car that uses GPS to show exactly where the car is. If your car is stolen, you can share the tracker’s location with the police so they can try to recover it quickly.
On top of these, it might be a good idea to follow standard safety practices like only parking in well-lit areas and not leaving valuables on show.
Why Choose Car Finance 247?
A wide range of lenders – At Car Finance 247, we work with a wide range of trusted lenders and have experienced helping those replacing a stolen vehicle.
Dedicated account manager – If you're approved in principle, you’ll have a dedicated account manager who’ll be on hand to answer your questions, help you find a car with the best deal for your circumstances.
Trustpilot rated ‘excellent’ – Our 5-star Trustpilot rating shows you can rely on us and have the peace of mind you need to find another car if yours is stolen.
The takeaway
If you’ve unfortunately found yourself in this position, knowing what happens if your car gets stolen on finance is important to getting it dealt with and can take away some of the stress.
Report it as soon as you find out, keep your insurer and finance company in the loop, and see what payout you get. And once it’s all resolved, you may be able to take out a new finance deal if you still need a car.
Get your quote today to find out if you could be eligible.