What Happens If My Finance Car Is Stolen? A Step-by-Step Guide

Having your car stolen is a stressful experience, especially when it’s still under finance. But don't worry—by taking the right steps quickly, you can manage the situation smoothly and minimise any financial impact. Here’s everything you need to know.

Immediate Actions: Reporting the Theft

Contact the Police First

As soon as you realise your car is missing, your first move should be to report it to the police. This is essential not just for the recovery process but also to ensure all legal protocols are followed.

• Use the 101 non-emergency number unless the theft is happening right now. This helps the police manage their resources more efficiently.

• Provide full details of your vehicle, such as:

  • Registration number

  • Make, model, and colour

  • Vehicle Identification Number (VIN) if you have it

  • Any unique features like stickers or custom modifications

Once you’ve reported the theft, the police will give you a crime reference number. This is crucial for your insurance claim, so keep it safe.

Inform Your Insurance Provider

Time is of the Essence

After contacting the police, your next step should be to inform your insurance company. Acting quickly ensures your claim is processed smoothly.

• Notify your insurer immediately—delays could complicate your claim. Most policies have strict time limits for reporting theft.

• Provide your crime reference number and detailed information about your car. This helps speed up the claims process.

What Happens Next?

Your insurer will assess your claim based on the market value of your car at the time of the theft. This process can take a few weeks, and in some cases, up to three months. If your car is recovered after you’ve been paid out, your insurer will typically take ownership of the vehicle.

Contact Your Finance Company

Legal Obligations

If your car is under finance, you must inform your finance company as soon as possible. This isn’t just a formality—it’s usually a requirement under your finance agreement.

• Prompt communication with your finance company is crucial to avoid any breaches of contract.

• Continue making finance payments during the investigation. Even though your car is missing, you’re still legally obligated to keep up with payments. This protects your credit score and avoids additional charges.

How Payouts Are Managed

If your car is written off due to theft, your insurance payout will first go to your finance company to settle the remaining balance on your loan. If the payout exceeds your loan, the excess will be returned to you. However, if the payout doesn’t cover the full loan, you’ll need to pay the difference. This is where GAP insurance can be a lifesaver.

Handling DVLA and Legal Formalities

Post-Settlement Steps

After your claim is settled, you’ll need to notify the DVLA that your car is no longer in your possession. This is typically done by filling out and sending off the V5C registration document (logbook).

• If you’ve already sent the V5C to your insurer, write to the DVLA explaining that your car has been claimed by the insurer, including details like the date of settlement and your insurance company’s information.

VED Refunds and Private Registrations

• Claim a VED (road tax) refund if your car isn’t recovered within a week. Contact the DVLA and fill out a V33 form to get a refund for any unused road tax.

• Transfer a private registration if your stolen car had one. You’ll need to wait a year from the date of the theft before applying and ensure the car was taxed and had a valid MOT at the time.

What If Your Insurance Payout Isn’t Enough?

GAP Insurance

If the insurance payout doesn’t cover the remaining balance on your finance agreement, GAP insurance can cover the shortfall. This is particularly useful if your car’s value has depreciated significantly.

• Types of GAP insurance include Finance GAP, which covers the difference between the insurance payout and the remaining finance balance, and Return to Invoice (RTI) GAP, which covers the difference between the payout and the original invoice price.

Alternative Solutions

If you don’t have GAP insurance and face a shortfall, consider:

• Loan restructuring: Contact your finance company to discuss extending the loan term or adjusting the repayment schedule.

Negotiating with your finance company: They might offer temporary payment reductions or deferments to help you manage the remaining balance.

FAQ:

Do I Still Have to Pay Finance if My Car is Stolen?

Yes, you must continue paying your finance agreement until the loan is fully paid off, even if your car is stolen. Once the insurance payout is made, your finance company will close your account if the payout covers the remaining balance. If not, you’ll need to pay the difference.

Will My Insurance Pay Off My Entire Finance?

Your insurance payout is based on your car’s market value at the time of theft. If the payout is equal to or more than your remaining loan balance, your finance will be paid off. If it’s less, you’ll need to cover the shortfall unless you have GAP insurance.

Can I Get a Courtesy Car While Waiting for a Claim?

Eligibility for a courtesy car depends on your insurance policy. Some policies include it as standard, while others may offer it as an optional extra. Check your policy details or speak with your insurer for more information.

Conclusion

Car theft, especially when your vehicle is still under finance, can be a challenging situation. But by following these steps—promptly contacting the police, your insurer, and your finance company—you can minimise the impact and navigate the process smoothly. Remember, these organisations are here to support you, so don’t hesitate to reach out.

If you require any further information don't hesitate to contact us here.