Car Written Off - Finance Outstanding

ParkerJ

Hello,

I am posting this on behalf of my brother who on Saturday had some car crash into his car and drive off. His car was declared a write off yesterday. The problem is the car that hit it, we later found and took some pictures of the car, after passing this information to the police they responded with. 'There's nothing we can do', because they said the car was registered to a foreign party, however a witness saw the person and was later identified, and he was not the named driver of the policy. The name too was passed on to the police but as expected there's nothing they can do.

This means he has to go and make a claim on his own policy.

When he brought the car the value was £6,500, but now the market value is roughly around £3,000. He's had the car little over a year, and has an interest rate of around 18%, which I know is high due to mistakes he made when he was younger. I believe it is a hire purchase agreement too.

He did not take GAP insurance, just because he never got round to it. Now his finance company are asking for a FULL SETTLEMENT of the policy which I believe is expected between £5,000 - £6,000. After the insurance payout he's going to be left with a shortfall of £2-3,000 which of course he doesn't have otherwise he wouldn't of took finance in the first place. The finance company said they will be placing 5% interest until it's paid. It's unknown weather this is daily, weekly.

Just wondering what can be done in this case, he needs a car as he works 7 mile away, and is a 2 hour bus journey, it's not ideal for someone who works 7.30am till 6pm. He needs a new car in an ideal situation.

Thanks for your help.

Gaz83

ParkerJ wrote: »

Hello,

I am posting this on behalf of my brother who on Saturday had some car crash into his car and drive off. His car was declared a write off yesterday. The problem is the car that hit it, we later found and took some pictures of the car, after passing this information to the police they responded with. 'There's nothing we can do', because they said the car was registered to a foreign party, however a witness saw the person and was later identified, and he was not the named driver of the policy. The name too was passed on to the police but as expected there's nothing they can do.

This means he has to go and make a claim on his own policy.

When he brought the car the value was £6,500, but now the market value is roughly around £3,000. He's had the car little over a year, and has an interest rate of around 18%, which I know is high due to mistakes he made when he was younger. I believe it is a hire purchase agreement too.

He did not take GAP insurance, just because he never got round to it. Now his finance company are asking for a FULL SETTLEMENT of the policy which I believe is expected between £5,000 - £6,000. After the insurance payout he's going to be left with a shortfall of £2-3,000 which of course he doesn't have otherwise he wouldn't of took finance in the first place. The finance company said they will be placing 5% interest until it's paid. It's unknown weather this is daily, weekly.

Just wondering what can be done in this case, he needs a car as he works 7 mile away, and is a 2 hour bus journey, it's not ideal for someone who works 7.30am till 6pm. He needs a new car in an ideal situation.

Thanks for your help.

Get the thought of a 'new' car out of his head. Use £1,000 of the insurance money to buy a cheap runaround. Send the rest of the insurance payout to the finance company and try to negotiate a payment plan to pay off the rest.

ParkerJ

Apologies 'new' is the wrong word. Replacement would of been a better choice of words.

Also the insurance company have to pay the settlement directly to the finance company there's no way he could take £1,000 out of it for himself.

Gaz83

Savings then. If no savings, looks like he'll need to put up with that bus journey. Unless he can find someone (or a company) willing to loan him £1,000, which might not be possible due to his credit history.

ParkerJ

Well the credit history I believe is now just "Fair" so it's not too bad. Still stuck with the £2-3,000 offset though. Just wondering if there's something other that can be done, as it's one of them things that he had no control of. He wasn't even in the car, and nor was the car left somewhere it shouldn't be.

Gaz83

ParkerJ wrote: »

Well the credit history I believe is now just "Fair" so it's not too bad. Still stuck with the £2-3,000 offset though. Just wondering if there's something other that can be done, as it's one of them things that he had no control of. He wasn't even in the car, and nor was the car left somewhere it shouldn't be.

There isn't really anything that can be done, no, other than attempting to negotiate a repayment schedule with the finance company.

Not getting around to getting Gap Insurance has been a costly mistake.

MEM62

ParkerJ wrote: »

Well the credit history I believe is now just "Fair" so it's not too bad. Still stuck with the £2-3,000 offset though. Just wondering if there's something other that can be done, as it's one of them things that he had no control of. He wasn't even in the car, and nor was the car left somewhere it shouldn't be.

Probably very little. The damage was done before the accident in that your brother borrowed money at a pretty high interest rate against an asset with a value that falls like a stone. Add into that the fact that he has not even limited his risk by taking gap insurance there was always a chance of him ending up in this situation.

I appreciate that it is tough on him and that the accident was not his fault but there is little that can be done now to improve the situation. Perhaps he has some savings that he can use to buy a cheap car so he at least has transport.

ParkerJ

Thought as much. It's not a fact of not wanting to face the inevitable just seeing what the finance companies obligations are. Is it all up for negotiations or is it, YOU MUST DO THIS?

If they demand the money and it can't be given, what's left to be done, apart from being taken to court. Just looking for some advice on how to handle it, I mean there are a lot of lessons to be learnt by this, it's just trying to deal with the fallout.

BadChad

Gap Insurers only pay out on average 15% of claims they have as they value the vehicles differently to how the Financial Ombudsman sets out insurance companies to value them. So, don't worry about not getting Gap Insurance as they likely would not pay anyway. Why is he claiming on his own insurance? If he has the foreign parties insurance details you can claim through the MIB instead of his own policy however, this would usually take months to settle. Failing that he could try and make a personal injury claim once the MIB has found the correct insurance company for the third party to payout and make help to cover the difference.

ratrace

BadChad wrote: »

Gap Insurers only pay out on average 15% of claims they have as they value the vehicles differently to how the Financial Ombudsman sets out insurance companies to value them. So, don't worry about not getting Gap Insurance as they likely would not pay anyway. Why is he claiming on his own insurance? If he has the foreign parties insurance details you can claim through the MIB instead of his own policy however, this would usually take months to settle. Failing that he could try and make a personal injury claim once the MIB has found the correct insurance company for the third party to payout and make help to cover the difference.

What are you talking about, He was NOT in the car when the car was hit

Telling the op to get his brother to make a false claim could have severe consequences for him.............

ratrace

ParkerJ wrote: »

Well the credit history I believe is now just "Fair" so it's not too bad. Still stuck with the £2-3,000 offset though. Just wondering if there's something other that can be done, as it's one of them things that he had no control of. He wasn't even in the car, and nor was the car left somewhere it shouldn't be.

Please read this badchad