Car finance and written-off vehicle

motorguy

colino wrote: »

The circumstances that the OP paints are that an innocent party will have had a collision, lost the car, be out of pocket and in breach of their finance agreement. Hardly a return to their status before a no-fault incident.

I dont think it will be the insurance company's fault though that the person owes more than the cars worth?

dacouch

For someone who has bad credit and thus hobsons choice when it comes to car credit, I think there's a very good chance the car dealer added GAP Insurance to the car sale.

Gap Insurance is designed to pay the difference between the car settlement and outstanding finance.

Although if the car was grossly overpriced to cash in on a desperate customer Gap Insurers may not be keen to cover the gap between the settlement and outstanding finance.

It would be well worth checking to see if Gap (Or similar) is included.

If you allow the car to be disposed of, you may find the finance company bill you for their black box

rorysdad

The third party insurers have paid the cheque direct to my friend.


There is no GAP insurance.


RD

TBagpuss

If the finance agreement says he must tell the company if the car is written off, then he must.

Is his credit better now than it was when the car was bought? Would he be able to borrow elsewhere to pay off the finance?

da_rule

Think of it like this, would you tell your mortgage company if your house fell down? The finance company have an interest in the car. At the very leads the is in breach of contract and could face civil action. If he gets found out he needs to be conscious of the impact it could have on his credit rating.

da_rule

Also, the agreement says he has to inform them. They may be willing for him to pay them the payout from the insurers and then continue paying off the outstanding balance in instalments.

If he gets found out the loan could get cancelled which will effect his credit score.

MEM62

rorysdad wrote: »

Hi


A relative bought a car on finance - HP. All payments up to date.


He had an accident recently and the third party admitted liability. They have made an offer on the car as it is a write-off. He hasn't informed the finance company of the accident - but he has been given a settlement figure by them - which is £1,300 more than the amount the third party insurers are paying for the vehicle.


In the finance agreement it states that he must inform the finance company that the car is a write-off.


**He is using a local (reputable) claims management company for his claim (which is also for whiplash injury). They have told him that he does not need to inform the finance company and that the pay out for the car is 'none of their business'.**


The claims company are advising him to ignore the terms of the finance agreement. Reputable? I don't think so! Ambulance chasers more like. Your relative would be stupid to consider this advice.


His dilemma is that he now has no car - but the amount the third party is paying for his write-off will buy him another vehicle.


He doesn't have the £1,300 shortfall to pay the settlement figure on the car to the finance company.


That is something that he needs to discuss with the finance company. If he has a settlement figure already I assume that he has been in contact with them.


Does anyone know:


1. Does he have to inform the finance company?
Yes! He should also have declared that the car was under finance on his insurance claim. Most specifically ask for this information.
2. Does he have to hand over the cheque which the insurers have sent - to the finance company This depends on his discussions with them. One way or another the issue of the finance has to be settled.
3. What does he do about the £1,300 shortfall owing to the finance company - which he does not have and cannot get hold of! If he comes clean are they likely to accept the amount of the cheque and write-off the balance! No, he will have to come to an agreement on the shortfall between the payout and the settlement amount.


Can he keep quiet, keep the settlement cheque and simply ensure that he carries on paying the finance as if he still had the car? The other complication is that the car is fitted with a black box which immobilises it if he misses a payment - and we think may also have a tracker in it.


Of course he can't and any attempt at doing so will get him into deep water.

If he has to hand over the settlement cheque and pay the £1,300 then he is stuck - as he has no vehicle and no money to buy another vehicle!

RD

I appreciate that his situation is difficult but the deception you are suggesting is not going to help. Remember, this is not his car - it is owned by the finance company until it is paid for. I would expect that their T&C's insist on insurance coverage and you can rest assured they will check - so he will get caught out sooner or later.