What happens if your car gets stolen on finance?

Roman Danaev

1 July 2022

Recent figures show that car theft is on the rise in the UK, with more than 900 vehicles stolen every week. Hopefully, you won’t find yourself a victim of this stressful, expensive crime. But it’s always best to be prepared. To that end, this article will tell you what you should do if you have a car stolen whilst on finance.

When you finance a car, unless you take out GAP insurance, you will have to continue making payments if the vehicle is stolen. Once you’ve paid off the remainder of your finance plan, however, you will be free to take out a new agreement.

This article will explain what happens if you get your car on finance stolen.

What to do if your car is stolen

When you think your car has been stolen, it’s all too easy to lose your head and panic. This is precisely what you should avoid.

Once you’ve confirmed that your car is stolen and hasn’t simply been borrowed unannounced by a friend or family member, there are a few important steps you must take. These involve informing the relevant bodies that your vehicle has been taken.

This section will walk you through the four crucial steps you must take if your car is stolen on finance.

1. Inform the authorities that your car was stolen

The very first thing you should do if your car is stolen is inform the police by calling them on 101. You can expect to be asked for more information about your vehicle, including details such as your registration number.

You will also be asked to provide the police with more detail of the theft itself, such as the estimated time your car was stolen, its location at the time, and whether or not you witnessed the crime.

2. Let your insurance company know your car has been stolen

After you’ve informed the authorities, you should let your insurance company know about the theft. The police should have issued you a crime reference number when you reported your vehicle stolen. Make sure you have a note of that, as you will need to give it to your insurer.

Your insurer will ask for additional details, including your name, contact information, and policy number. Once you’ve given them the required information, the insurance company will begin to investigate your claim.

3. Let your finance provider know your car has been stolen

Next, you must inform your finance provider of the theft. They will ask for similar details as your insurer: your crime reference number, contact information, car details, and so on. They will also request confirmation from your insurer that your vehicle has been stolen.

While your insurer is investigating the claim, you will have to continue paying finance. Furthermore, unless you took out GAP insurance, you’ll need to keep making payments if the insurance payout amount doesn’t cover the remainder of your balance.

4. Inform the DVLA that your car has been stolen

Finally, you should contact the DVLA. While the police will let them know about the theft, you will still have to get in touch with them if your car insurance company pays out your claim. This can be done online or by post.

You will also need to reach out to the DVLA to submit a tax refund application, as you will not be issued one automatically. If your application is successful, you should receive your refund in 4-6 weeks.

Will you receive a VED refund for your stolen car?

If your stolen vehicle is not recovered within seven days of reporting the crime, you may be eligible for a vehicle excise duty (VED, otherwise known as road tax) refund.

Please note that if you pay your road tax in monthly instalments, you will not be eligible to claim your money back. In this case, you should get in touch with both the DVLA and your bank to cancel your VED payments.

What happens if your car has a private registration?

If your car had a private registration, you can request for the number to be switched over to another vehicle. However, note that you must meet the following conditions:

  • Your car must have been stolen at least one year ago.
  • You must have reported it to the authorities at the time and must have a valid crime reference number.
  • Your car must have been under MOT at the time it was stolen.
  • You must have proof from your insurance company stating that they will allow you to transfer your registration number to another vehicle.

Can a finance company report your car as stolen?

The answer to this question isn’t a simple yes or no; a finance company can only report your car as stolen under particular circumstances.

If your car finance company issued you an unsecured loan (i.e. a personal loan), they do not actually own the car. You do. That means they are not able to report your car as stolen.

However, if you purchased the car using a secured loan, such as a Hire Purchase (HP) or Personal Contract Payment (PCP) finance agreement, then the car still belongs to the finance company. In that case, they will be able to report your vehicle as stolen.

Note that other factors may come into play here, too, including how much of your finance plan you have paid back. In short, whether or not a finance company can report a vehicle as stolen differs from situation to situation.

Should you take out GAP insurance?

Earlier in this article, we mentioned the possibility of taking out GAP insurance—or Guaranteed Asset Protection insurance. In the event there is a shortfall between the settlement figure your insurance company offers for your stolen car and the amount you still owe towards your finance agreement, GAP insurance can be useful.

GAP insurance can cover the difference between these figures, giving you peace of mind knowing that your money is protected if ever your car is stolen. That’s why it’s often worth checking whether or not GAP insurance is included within your insurance policy.

Guaranteed Asset Protection insurance is not legally required, so you don’t need to take it if you don’t want to or if you can’t afford it. That being said, if you can afford the expense, GAP insurance is worth thinking about.

If you are interested in taking out GAP insurance on your vehicle but find out that it isn’t included in your policy, you can always arrange for extra cover from your insurer.

Get in touch with our brokers

No one likes to think that they will experience car theft—and understandably so. It’s a stressful and expensive experience for anyone and even traumatising. That being said, you should still be prepared in the eventuality that it is something you are put through. Hopefully, after reading this article, you feel more confident that you know which steps to take if your car is stolen on finance.

If you would like to find out what car finance options are available, reach out to our brokers. Here at Carplus, we work with numerous lenders and car finance companies and have access to more than one hundred car finance deals. This means that regardless of your financial situation or your credit score, we can help you find a finance arrangement that works for you

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