New car replacement cover and a PCP

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theoldgillette
theoldgillette Posts: 14 Forumite
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We recently had our 11 month old car stolen. We have new car replacement cover with our insurance. The insurance company are saying they would replace the car with a new one except the finance company won’t allow it. Instead they will settle the finance leaving us with little or nothing. Anyone experienced this? Is there any point in challenging the finance company?
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  • System
    System Posts: 178,094 Community Admin
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    The finance was secured on that individual vehicle and it belonged to them which is why the finance company need to be paid out first. Even if the insurance company paid you out in cash you would need to repay the finance company the settlement amount because the loan will now be due in full as the car it was secured on is a total loss.

    In short you're in no different position the insurance company paying off the finance than you would be if you were compensated in the traditional manner.
  • motorguy
    motorguy Posts: 22,473 Forumite
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    Tarambor wrote: »
    The finance was secured on that individual vehicle and it belonged to them which is why the finance company need to be paid out first. Even if the insurance company paid you out in cash you would need to repay the finance company the settlement amount because the loan will now be due in full as the car it was secured on is a total loss.

    Yup. Totally it.
  • theoldgillette
    theoldgillette Posts: 14 Forumite
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    I understand what you are saying but the insurance would replace the car with the same make and model - why can’t we just continue the finance agreement on the replacement car? Or even settle the agreement ourselves and take the replacement car?
  • motorguy
    motorguy Posts: 22,473 Forumite
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    theoldgillette wrote: »
    I understand what you are saying but the insurance would replace the car with the same make and model - why can’t we just continue the finance agreement on the replacement car? Or even settle the agreement ourselves and take the replacement car?

    Because the finance is on that specific car, which no longer exists.

    I would have thought you could ring right now and settle the finance outright, but they may not even let you do that, depending on the terms you signed up to.

    The finance company will be very jumpy about this currently - their car no longer exists as a viable asset and you owe them a lot of money. They will want that rectified as cleanly as possible.
  • theoldgillette
    theoldgillette Posts: 14 Forumite
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    Ok thanks. I guess we can ask if they’d accept settlement from us rather than the insurance company but I’m guessing not.
    The insurance company implied that some finance companies do allow new car replacement so it’s veey disappointing to be with one that doesn’t
  • Mercdriver
    Mercdriver Posts: 3,898 Forumite
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    This situation can be very unfair. My nephew had his car written off through no fault of his own. He was in the same situation as the OP, and then found when he went to get another car on finance from the same finance house, he was declined on the credit check, even though he was actually in a better financial position than before. The finance house had changed some of their parameters.
  • motorguy
    motorguy Posts: 22,473 Forumite
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    theoldgillette wrote: »
    Ok thanks. I guess we can ask if they’d accept settlement from us rather than the insurance company but I’m guessing not.
    The insurance company implied that some finance companies do allow new car replacement so it’s veey disappointing to be with one that doesn’t

    Yes would be worth asking the finance company if you can clear it yourselves if that gets you in to a brand new car from the insurance company for the price of the settlement figure on the used car.
  • neilmcl
    neilmcl Posts: 19,460 Forumite
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    I wonder what happens if you have GAP replacement vehicle cover in this scenario. Normally you'd get the additional funds to get a brand new, replacement vehicle, or the choice to settle the finance yourself and pocket the difference. Presumably in this case the GAP wouldn't pay out if the finance is settled fully by your insurer.
  • System
    System Posts: 178,094 Community Admin
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    motorguy wrote: »
    Yes would be worth asking the finance company if you can clear it yourselves if that gets you in to a brand new car from the insurance company for the price of the settlement figure on the used car.

    The OP doesn't have the money to pay it and they'd need to find a loan to cover that which isn't a given because until the finance on the car they no longer have it will appear on a credit check and limit the amount they can borrow and the rate offered.
  • motorguy
    motorguy Posts: 22,473 Forumite
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    Tarambor wrote: »
    The OP doesn't have the money to pay it and they'd need to find a loan to cover that which isn't a given because until the finance on the car they no longer have it will appear on a credit check and limit the amount they can borrow and the rate offered.

    The O/P has said twice now settling the finance themselves was an option.

    "Or even settle the agreement ourselves and take the replacement car?"

    "we can ask if they’d accept settlement from us rather than the insurance company"

    Even IF they dont have the hard cash at hand / to borrow they could try for a cheap loan. Loads about. Could be worth while checking availability in their circumstances.
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