If you’ve written off a financed car, you must keep paying your finance until the settlement is resolved. Failure to do so will impact your credit score and may ultimately lead to repossession or legal action.

Typically, if your insurer determines your car to be a write-off, their payout will go to the lender rather than direct to you. However, if the insurance payout doesn’t cover the outstanding balance that remains on your finance agreement, you may still owe your finance lender money.

Below, we’ll outline what happens if you crash a financed car, giving you detailed next steps and advice.

What does ‘written off’ mean for a car on finance?

If an insurer determines that a car is ‘written off’, they’ve decided that the vehicle is either damaged beyond repair, or that any repairs will cost more than the car’s total value. The term used by insurers is ‘beyond economical repair’ (BER).

Insurers have four write-off categories:

• Category A – The car is so badly damaged that its parts are only fit for purpose as scrap (non-repairable).
• Category B – The car’s body has significant damage, but there are salvageable parts that can be used as spares for other vehicles.
• Category S (formerly Category C) – The car has suffered structural damage that makes it unsafe to drive until professional repairs are made.
• Category N (formerly Category D) – The car is structurally sound with either some cosmetic or electrical damage, or non-structural damage to the steering or brakes that might make the car undriveable until repairs are made.

When you make an insurance claim for a damaged car, your insurer will use these four categories to determine whether or not your vehicle is written off. This categorisation will then dictate how much your insurer will pay out for the damage.

Who owns a car on finance if it’s written off?

The owner of a financed vehicle that’s been written off depends on the finance agreement:

• HP finance – The lender owns the car until final payment is made
• PCP finance – The lender owns the car until a balloon payment is made
• Personal loan – You own the car outright because a lender only finances the purchase

What happens if you crash a car on finance with insurance?

If you’ve got an insured car on finance that’s been written off, you need to let your insurer, lender and the DVLA know as soon as possible. 

The insurer will use the four categories above to determine the degree of vehicular damage. This damage will then inform the settlement price your insurer will offer.  

The settlement fee is the amount that your insurance company is prepared to pay you for the car. If you think that the total is too low because you think the car is worth more than your insurer is offering, you can challenge it. Just be aware that this will slow down the process and delay your receipt of the payout.

If you accept the settlement fee and are the outright owner of the written-off vehicle, the insurer will make the payout to you. However, if you’re using a financed car, the insurer will typically make this payout direct to the lender. 

If your insurer’s payout covers your outstanding car finance balance, your finance is cleared. 

If the insurer’s payout is less than your finance balance, however, you need to make up the difference. 

GAP (Guaranteed Asset Protection) insurance can act as a safeguard in these kinds of instances. In cases where your insurer’s payout is less than the outstanding amount you owe to your car finance lender, GAP insurance can cover the shortfall. 

What happens if you crash a financed car without insurance?

If you have a car on finance that’s written off and is not insured, you are liable for the outstanding balance on your finance agreement. Obviously, insurance is a legal requirement, but you may only have third-party or third-party, fire and theft insurance.

Without the insurance payout, you’ll be paying for this outstanding balance from your own pocket. 

If you don’t make all necessary payments, you’ll face possible repossession of the vehicle or even legal action.

Having comprehensive insurance for a financed vehicle is a way to avoid facing high fees in case of accidents or vehicle damage.

Related: Does Car Finance Include Insurance?

What if the accident wasn’t my fault?

In instances where a car on finance is written off and you are not at fault, the other driver’s insurance should cover the payout. 

You are still responsible for liaising with your lender until the balance on your account is fully settled. 

Do you still have to pay finance after a write-off?

Until your car finance lender receives the insurer’s payout and confirms settlement, you are legally responsible for making your monthly finance repayments. 

A car finance contract is a legally binding agreement, meaning the lender is owed in full, even if your vehicle is undergoing repair following damage. 

If you don’t make your monthly payments, it will impact your credit score, and you may face further legal repercussions.

In some cases, your insurer’s payout may not make up the total outstanding balance that remains on your car finance. In these cases, you’ll be responsible for making up the shortfall, unless you have GAP insurance.

What is GAP insurance and how does it help?

If your insurer’s payout is less than the outstanding balance on your auto finance agreement, GAP insurance can make up the remaining cost so that you don’t go out of pocket.

For example, if your total finance balance is £12,000 and your insurance payout is £10,000, you’ll have a £2,000 shortfall. If you’ve got GAP insurance, this will make up the outstanding balance. Without it, you’ll be expected to pay the two grand yourself.

Be aware that GAP insurance isn’t offered as standard. As such, if you’re looking to insure a car on finance and are concerned about your options in case of accidents, speak to your insurance company about GAP insurance. It’s especially useful in the first two to three years of car ownership.

Step-by-step: what to do if your financed car is written off?

If your car on finance is written off, take the following steps:

1. Take photos of the damage and the numbers and car registration of all involved parties. Keep a note of other important information regarding the accident.
2. Inform your insurance provider 
3. Notify your finance company 
4. Wait for insurer valuation and settlement offer
5. Check outstanding finance balance vs. valuation of payout
6. Consider GAP insurance (if active)
7. Resolve any shortfall, if necessary

Moving forward after a car write-off

When your car on finance is written off, it can feel stressful. But with insurance and finance support, it’s more than possible to find a manageable way to move forward after a car write-off. 

My Car Credit can help drivers like you find affordable auto finance for a replacement vehicle. Alternatively, if you’re looking for your next drive after fully paying off your previous motor finance agreement, use our car finance calculator to work out the kind of deal that might be most suitable for you.

FAQs about what happens if you crash a car on finance

What happens if I crash a financed car and it’s my fault?

If you crash a financed car and are at fault, you need to inform your insurer. They’ll assess the scale of damage and determine any payout. You’ll need to keep making your monthly finance payments and inform your lender about the crash and any liaison with your insurer.

What if my financed car is written off and I still owe money?

If your financed car is written off and you have outstanding finance to pay, you’re legally liable to repay this in full. Your insurer will offer a payout based on the degree of vehicular damage. This payout is then put towards your outstanding finance balance. You’ll need to make up any shortfall yourself, unless you have GAP insurance.

Can I get another car on finance after a write-off?

It’s possible to get another car on finance after a previous write-off, provided you repaid the outstanding finance on your previous vehicle in full. Failure to make up this outstanding balance on a financed car will impact your credit score and may affect your eligibility for future loans.

What if my car on finance with a provisional licence is written off?

If your financed car with a provisional licence is written off, you need to follow the same protocol for a fully licenced, financed car. Inform your insurer, finance lender and the DVLA, and wait for your insurer to confirm their payout to determine your next steps.

Will a write-off affect my credit score?

A car write-off won’t automatically impact your credit score. However, if you fail to make your monthly repayments or don’t make up the outstanding balance on your finance agreement, your credit score will be negatively affected.

Can I transfer my finance to another car?

You cannot swap a car finance agreement from one vehicle to another. You’ll have to make up any outstanding finance on your existing agreement before taking out a new one. Provided you’ve paid off 50% of the total amount you owe, you may be able to opt for voluntary termination.

Today’s consumer prioritises car finance terms with flexibility, better rates and a more personalised service. UK car finance brokers offer all these via a streamlined and supportive process.

So, whether you’re a first-time buyer, are self-employed, have poor credit, or you just want to get the right deal for you, car finance brokers are fast becoming the go-to choice. 

This article explains what car finance brokers do, how they differ from traditional lenders, why use a car finance broker, and how they can benefit you in your search for the most appropriate car finance for your needs.

What is a car finance broker?

In essence, a car finance broker is a middleman between you (the borrower) and a range of finance lenders.

Where banks or dealerships tend to offer you a single finance deal, a car finance broker works with a panel of lenders to find the option that best fits your financial situation and vehicle preferences.

Most importantly, reputable brokers such as My Car Credit are authorised and regulated by the Financial Conduct Authority (FCA). As such, we operate with transparency, professionalism and fairness, so you can feel confident that you’re in safe hands.

Brokers vs. lenders: know the difference

There are key differences between brokers and lenders.

Lenders are financial institutions, including banks and credit unions. They offer their own set of finance products. If you go directly to a lender, you’ll face limited choice based on what kinds of finance that one organisation can provide. What’s more, if you don’t fit the lender’s criteria, you might get rejected or be offered a deal that’s not suitable.

On the other hand, brokers work with multiple lenders. They act on your behalf to compare options, assess your eligibility and present you with the most suitable deals from across the market. This broader reach can result  in more competitive rates, flexible terms and better outcomes – especially for applicants with unique financial circumstances.

Using a car finance broker is much like using a travel comparison site. Instead of calling multiple airlines, you enter your details once and get a range of suitable flight options. Brokers do the same for car finance, but with far more guidance and support.

While dealership finance might seem convenient, it can sometimes be more expensive. The rates offered are often fixed and may include commission-based markups. Brokers offer clarity, impartial advice and a better chance at finding a deal that suits your individual needs.

Unlock finance options dealers can’t always match

A major benefit of using a car finance broker is their ability to connect you with finance options that just aren’t available elsewhere. Why use a car finance broker? With a car finance broker, you can benefit from access to specialist lenders—institutions that cater to people with bad credit, those who are self-employed, and applicants with no deposit.

Car finance brokers can also give you better access to flexible repayment terms that can be adjusted based on your credit profile, income and lifestyle. 

Plus, you may also benefit from lower APRs with a car finance broker. Some of the most competitive or flexible finance products are broker-only, so you won’t find them directly advertised to the public or through car dealers.

Whether you’re after a new or used car, a broker’s panel of lenders increases your chances of securing an affordable, tailored finance solution.

Why Use a Car Finance Broker – Top Benefits

Wider choice of lenders

Car finance brokers work with a broad panel of lenders, giving you access to more finance options than you’d secure through a single dealership or bank. This increases the likelihood of securing a deal that suits your needs.

Soft credit search to start

At My Car Credit, we begin every application with a soft credit check. Because this won’t impact your credit score, you can explore your options without any risk to your financial profile.

Less paperwork, faster process

Car finance brokers streamline the application process. At My Car Credit, our process is all done digitally, ensuring speedy applications and fast approvals that reduce your stress and save you time.

Expert help and ongoing support

A car finance broker will guide your journey from start to finish. You’ll benefit from the ongoing support of someone to explain your options, answer questions and handle much of the admin, making the experience less daunting.

Better approval odds for complex applications

At My Car Credit, we accept individuals with a range of circumstances and profiles. Whether you have bad credit, an irregular income or alternative needs, we know which lenders are more likely to accept your application. This targeted approach can greatly improve your chances of getting approved.

All of these benefits add up to help answer the common question – “why use a car finance broker”. They offer more choice, expert guidance, and a smoother journey to securing the right deal for you. Instead of going it alone, a broker can help you save time, reduce stress, and boost your chances of approval.

When should you consider using a car finance broker?

Different car finance applicants will have different needs and circumstances. If you fit into any of the following categories, you may most benefit from using a car finance broker:

• First-time car buyers who are unsure of the finance process and want guidance.
• People who’ve been turned down by banks or dealers, and need a second chance with tailored finance options.
• Self-employed or freelance workers whose income doesn’t fit traditional lending criteria.
• Buyers looking for a hassle-free finance journey who could benefit from expert help.
• Applicants comparing options before committing to dealer finance.

How the car finance broker process works

Using a car finance broker like My Car Credit is simple, efficient and online-first. It’s really as easy as one, two, three:

• Apply online – you’ll complete a short online application via our form. We’ll perform an initial soft credit check to assess your eligibility without impacting your credit score, giving you a no-obligation quote.

• Get matched to a lender – our system will pair you with suitable finance options based on your distinct profile. 

• Choose a car and drive away happily – once you’re approved for finance, you can confidently shop for a vehicle that fits your budget. With My Car Credit, you can even use our one-stop shop of quality, pre-approved vehicles to secure your car and car finance in one go.

Apply for car finance with My Car Credit

Apply for car finance with My Car Credit to take advantage of the benefits of using a car finance broker. We’re part of the UK’s largest motor finance provider, and are trusted by thousands of drivers with all types of credit profiles. 

Our online application process is quick and easy to fill out, and you’ll experience the support of a real UK-based team of Car Credit Specialists throughout the process. 

We’ve got car finance available for both new and used vehicles, and can help individuals with variable credit profiles, conducting an initial soft search that won’t impact your score.

Kickstart your car finance journey by using our car finance calculator, or speak to one of our friendly team today.

Common questions about car finance brokers

Do car finance brokers charge a fee?

Most reputable brokers don’t charge customers directly. Instead, they receive a commission from the lender if you take out a finance agreement. This means you can usually use a broker’s service at no cost to you.

Is using a broker safe?

Yes – especially when the broker is FCA-regulated, like My Car Credit. Regulation ensures that we adhere to strict standards and put your interests first, operating with absolute transparency.

Will using a broker hurt my credit score?

Initial car finance applications with a broker typically involve a soft credit check, which has no impact on your score. At My Car Credit, we’ll only conduct a hard credit search once you’re ready to proceed with an offer.

Do brokers work with bad credit customers?

Many brokers specialise in helping people with poor or limited credit histories. Our broad panel of lenders means that My Car Credit can connect you with lenders who understand your situation, potentially providing finance where others haven’t been able to.

Can I get finance for a used car through a broker? 

Brokers offer car finance for new, nearly-new and used cars. With My Car Credit, you may be able to get pre-approval for finance, beginning your search for a vehicle that suits your approved budget.

What’s at stake?

Get it wrong, and you could face higher interest rates, unfavourable terms and in a worst-case scenario, flat-out denial of your application. 

Get it right, and you can secure a deal that fits your budget, with manageable payments, fair interest rates and best of all, the coveted ‘your application has been approved’ letter. 

The key to success? Avoiding online car finance application pitfalls. Whether you’re completely new to auto finance or are a bit of an old hand, here’s your definitive guide to avoiding the most common mistakes.

Know your budget before applying

Get your financial ducks in a row before starting the car finance application process. The sticker price of the car is important but don’t forget to factor in the boring bits. Extras like insurance, maintenance, fuel and repairs should all be written into your final budget. A good understanding of your overall financial picture will help you set a budget that won’t leave you eating beans on toast for the next three years. 

Tools like a car finance calculator are your best mates here. In a few clicks, you can estimate how much you can borrow, what your monthly payments might look like and how different terms affect the overall cost. Why crunch your numbers now? It’s simple. So you can make sure you’re not biting off more than you can chew. 

Check your credit score

Lenders don’t know you personally, so a simple “I’m good for it” won’t suffice for a car finance application. Instead, they scrutinise your credit score. This numerical reflection of your financial reliability is like a vehicle maintenance log, except for your personal finances. Things like your payment history, outstanding debts, length of credit history and new credit enquiries can all affect your credit score. 

Don’t stress if your score’s less-than-perfect though, there are ways to get back on track.

Play it smart with lenders

Sending off online car finance applications to multiple lenders might seem like a good way to increase your chances of approval. The reality? Too many “hard searches” on your credit file can make you seem like a risky borrower. Stick to soft searches or pre-approval tools that let you check your eligibility without leaving a mark.

Use credit check tools

Check your credit score with tools like Experian and Equifax before you apply. These will show you what lenders see and give you a chance to tidy up any issues. 

Explore options for bad credit

Credit score looking a little worse for wear? Specialist lenders, like the ones we work with at My Car Credit, offer tailored finance options for auto finance applicants with poor credit. 

Consider any additional costs

Monthly payments aren’t the whole story when it comes to car finance. Forgetting about the extra costs is one of the most common mistakes – don’t let it catch you out.

Beware the balloon payment

There’s likely a balloon payment waiting at the end of your term if you’ve gone for a PCP agreement. It can be a nasty surprise if you’re not prepared. Check out our balloon payment guide for a full rundown on what this is. 

Work with the experts

The easiest way to avoid car finance application roadblocks? Work with someone who knows the ropes. We lay out all the costs upfront at My Car Credit, so you know exactly what you’re signing up for. No smoke, no mirrors. Just clear, honest advice from professionals who know their stuff.

Make sure your car finance documents are in order

Nobody loves paperwork, but when it comes to car finance, it’s non-negotiable. Missing documents can bring your application to a grinding halt, even if your credit score is best-in-class. 

Your essential checklist

Here’s what you’ll need to have ready for your car finance application:

• ID – Passport or driver’s licence
• Proof of address – Recent utility bill or bank statement.
• Proof of income – Payslips or tax returns if you’re self-employed.
• Bank details – For setting up payments.

How My Car Credit can help

Worried you’ll miss something? This is where we come in. At My Car Credit, we know our way around the car finance application process. We’ll guide you through the paperwork step-by-step and make sure you’ve got everything sorted before your application’s sent off. With the right preparation, there’s no reason you can’t get it right the first time. 

Next steps for a smooth car finance application

With your budget set out, your credit score checked and your documents in order, you’re ready to hit send on your car finance application. 

Here are a few final tips to keep things stress-free:

Stay organised

Create a folder (digital or physical) for all your car finance application documents. Having everything in one place saves time and keeps headaches at bay.

Ask for help when you need it

Confused about anything? Don’t suffer in silence. My Car Credit is just a click or call away. We’re here to answer your questions about the car finance application process and help you get it right the first time. 

Use online tools

From the My Car Credit budget calculator to free online credit checks with agencies like Experian, online tools are a fantastic resource. Use them – they’re designed to make your life easier.

Getting your car finance application approved isn’t rocket science. Success is all about preparation, attention to detail and working with the right team. By knowing your budget, checking your credit score, factoring in all costs and getting your documents in order, you can give yourself the best possible shot of an ‘approved’ verdict. 

Don’t forget, My Car Credit is here to help every step of the way, so fill out an online car finance application and let’s get started.