Car Stolen on Finance? Here’s Everything You Need to Know (And Do)

Car theft is a horrible and stressful experience. Not only do you lose your freedom to travel the open roads, but you also have to juggle the headache of reporting the loss to several different parties.

Car theft, unfortunately, is far from rare in the UK. A recent study from Statista reported that a staggering 129,159 vehicles were stolen in England and Wales in 2023. So whether you have suffered a recent loss, or would like to prepare for such an emergency, it is always worth exploring what really happens if your car is stolen on finance.

Read on to understand the steps to follow if your financed car is stolen. Our guide covers everything from your immediate actions to understanding how it impacts your finance agreement and insurance claims.

How Does Car Theft Impact Your Finance Agreement?

When a financed car is stolen, the finance agreement doesn’t just vanish along with the vehicle.  In fact, the unfortunate reality is that the finance contract usually stays in place, meaning you’re still responsible for the payments as if the car were still yours.

Simply put, as the vehicle is technically still financed, lenders generally require that you keep up with your regular payments.

As frustrating as it is, if you’re wondering whether you still have to pay finance if your car is stolen, the answer is unfortunately yes. 

Immediate Steps to Take if Your Car on Finance Is Stolen

Losing your car may feel like the end of your world, but by taking swift action, you can take control of the situation. Here’s a step-by-step guide to the reporting process:

Step 1: Notify the Police

Your first call should always be to the police. Reporting the theft creates an official record, a requirement of both insurance providers and finance companies.

• How to Report: Contact your local police department’s non-emergency line (101), unless you suspect the theft is in progress, in which case call the emergency number (999).
• What to Have Ready: Vehicle details like make, model, colour, registration number, and VIN (Vehicle Identification Number), along with any finance paperwork.
• Why It Matters: Insurance companies need a police report to process your claim, and a prompt report can help ensure things move quickly.

Step 2: Contact Your Insurance Provider

Next up, your insurance company takes priority. By letting them know early about the stolen car, they begin your claim, helping to speed up the payout process if the car isn’t recovered.

• How to Notify: Most insurers have a claims line or an online portal for reporting vehicle theft.
• Documents to Prepare: Have your finance agreement, police report, vehicle info, and any records on theft protection or anti-theft devices ready.
• Why It Matters: The faster you report, the better your chances of getting a timely payout based on the car’s current market value.

Step 3: Notify Your Finance Provider

Finally, after contacting the police and insurance, it’s time to inform your finance provider. Don’t miss this crucial step, as keeping them updated on the car’s status ensures that they’re aware of your insurance claim.

• What to Provide: Share details of your insurance claim, the police report, and any timeline provided by your insurer for the expected payout.
• Why It’s Important: Your finance provider has a legal interest in the vehicle, so they need to know about the theft.

Essential Documentation Checklist

If you’re ready to report your car as stolen, take a moment to gather the following documents to streamline your claims process:

• Police report
• Insurance claim form
• Finance agreement and any related paperwork
• Vehicle information (make, model, registration, and VIN)
• Anti-theft device details, if applicable

Understanding the Insurance Payout Process After a Car Theft

The timeline for a payout can vary by provider, but generally follows a predictable process. 

First, after you report the theft, your insurer begins a claim investigation, which typically takes 1-2 weeks. This initial review involves checking the police report, looking over any available security footage, and verifying relevant documents. 

Once everything is in order, the insurer assesses your car’s current market value. They calculate this using industry-standard valuation guides that take into account the vehicle’s depreciation and condition. If the claim is approved, you can usually expect the payout within another 1-2 weeks, meaning the entire process often spans 4-6 weeks from the time of your initial report.

If the insurance payout doesn’t cover the remaining balance on your finance agreement, you still have options to help bridge the gap.

• Dispute the Payout Amount: If you feel the payout doesn’t reflect your vehicle’s market value, you can request a review and provide evidence like recent sales listings for similar vehicles or an independent valuation.
• Consider GAP Insurance: Guaranteed Asset Protection (GAP) insurance is designed to cover the difference between the car’s current value (paid out by insurance) and the remaining finance balance. If you haven’t purchased GAP insurance, consider it for future protection in case of total loss or theft.

How Insurance & Finance Work Together

When your insurance claim is approved, the insurance company will work with your finance provider to settle your loan. Usually, the insurance payout goes directly to the finance company to cover what you owe. But if the payout is less than your loan balance – aka a ‘shortfall’ – you’ll need to pay that difference yourself.

Shortfalls typically happen if the car has lost a lot of value since you bought it or if you have a long-term loan with high interest rates. 

If you are facing a shortfall, contact your finance company right away to find out how much you still owe and discuss your payment options. They may be able to help you restructure your payments or set up a new loan based on your situation.

Frequently Asked Questions

Do I Still Need to Pay My Finance if My Car Is Stolen?

Yes, you typically need to keep making payments on your finance agreement even if your car is stolen. The finance company expects you to meet your payment obligations until the insurance claim is fully processed and the outstanding balance is settled. 

This can add financial stress, so it’s important to budget carefully during this time. If you’re having trouble making payments, reach out to your finance provider as soon as possible to discuss your options.

Will Insurance Always Cover the Outstanding Finance Balance?

Not necessarily. Whether your insurance will cover the entire outstanding balance on your finance agreement depends on a few factors:

• Market Value: The insurance payout is based on the car’s market value at the time of theft, which may be lower than what you owe on your finance agreement because of depreciation.
• Policy Type: The specifics of your insurance policy, including any limits or exclusions, can impact the payout. Comprehensive policies usually cover theft, but it’s important to check the terms for any conditions that may apply.
• GAP Insurance: If you have GAP insurance, it can help cover the difference between the insurance payout and the remaining loan balance. Without it, you may need to pay the shortfall out of pocket.

Can I Get a Courtesy Car After a Theft?

Many insurers offer courtesy cars, but there are usually certain conditions:

• Coverage Type: Courtesy cars are typically available with comprehensive insurance policies, while third-party policies generally do not include them.
• Duration of Claim Processing: The availability of a courtesy car may depend on how long your claim is expected to take. Some insurers provide a temporary vehicle while your claim is processed, while others only offer it once your claim is approved.
• Policy Limits: There may be restrictions on the type of vehicle you can use or how long you can keep it, so it’s a good idea to review your policy details or speak to your insurance provider for clarification.