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What Happens If a Car is Beyond Repair on Finance?

Posted on 21st March 2022
What Happens If a Car is Beyond Repair on Finance?

A short while ago we talked about category S cars and the other categories damaged vehicles may find themselves in.

Sometimes though, when your vehicle gets listed like this it isn’t yours…well not yet anyway. You have been paying for it on finance and now its undrivable…what happens next?

In this week’s article, we will look at what happens if your car has been written off and is still on finance.

What is a write-off?

The condition of the car will determine what category it is placed into. The category it is placed into will then show whether your car can be salvaged in any way.

Category A

A total write-off. All parts of the car must be scrapped and not used in any way at all.

Category B

Like category A, the vehicle must be destroyed. If, though, there are some parts that are safe to reuse, they may be kept.

Category S

Category S vehicles are those that have suffered structural damage. They can be road worthy once repaired but only if the job has been carried out by a professional and the vehicle re-registered with the DVLA.

Category N

A vehicle with category N damage means that there are parts that can still be used again, and the damage is mainly cosmetic. If the driver believes the repair to not be cost-effective, they may put the vehicle into category N.

What should you do if your car is written off?

If your car ends up having to fall into one of the above categories, firstly assess your situation. Depending on the category the car falls into will determine what happens next.

As a matter of course, the following steps are imperative.

Contact your finance provider

You will need to do this as soon as possible – with money being owed, it is still their car! You can contact via phone, email or face-to-face where possible. They will then instruct you on where to go next. It is likely they will ask whether you have spoken to the DVLA or your insurance company.

Speak to your insurer

By letting your insurer know as soon as possible, they will be able to guide you on where you stand with your current policy in regard to a write-off.

Inform the DVLA

Depending on the level of write-off, the car may need to be de-registered. By letting the DVLA know, they can put this in place.

What if my financed car is a write-off?

There are a few options available to you and they will largely depend on the following:

  • The condition of the car
  • How much of your car finance has been paid off
  • The terms of your agreement

Clear the balance

The insurance company should be able to pay the amount that the vehicle was worth at the time of write-off. You could then use this to pay the remaining balance to your finance provider. If though, the insurance doesn’t cover the value, you could make a partial payment that significantly reduces the balance and the length of time it takes to clear it.

The terms of your agreement will indicate whether you can pay the balance early. If you are unsure, contact the provider and see what kind of new plan you can set up.

Buy the car back and repair it

Now depending on the category of write-off, this is not always possible. If it is, you need to inform your insurer right away if it is something you plan to do. A professional mechanic should give the car a full assessment first though.

Remember, if the car is deemed as cat A or B, then it simply cannot be repaired.

Be aware though, that if you do not reach out to the insurer right away, they may have already put a plan in place with a salvage company. From there you will not be able to get the car back and will only have the settlement to accept. Not the vehicle.

It’s worth noting that any car that has been deemed cat S or N will need a new insurance policy. Not only will this policy cost you more than the original one, but the resale value of the car will also have decreased significantly.

Buy a new car and keep paying finance

With the payment received from the insurance company you may be able to purchase a new vehicle and continue with paying the monthly amounts due on the finance agreement.

Sometimes though it is worth considering GAP insurance.

What is GAP insurance?

GAP, or guaranteed asset protection insurance is taken out to cover the difference between the insurance payout and the remaining balance on the vehicle.

With any form of insurance, we would advise you talk to insurance providers and do some background research. This way you can be fully confident that you are covered sufficiently and understand the potential outcomes.


At Euphoria Finance we have over 50,000 vehicles to chose from, all of which pass stringent safety tests to ensure they are 100% roadworthy.

Whether you are a driver looking for new car finance, used car finance or perhaps someone with previous bad credit, we can guide you though the process of securing fast car finance. Contact us today for a free quote.

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