Many drivers are navigating car finance options, and the possibility of theft can be a real concern. Nobody likes to think about their financed car getting stolen. However, it is really important to know what to do in case this does happen, so you can act quickly and take the right steps. 

If your finance car is unexpectedly stolen, it can feel like you're stuck in a nightmare. Not only is your car gone, but you also have ongoing financial commitments to think about. So, what should you do?

Immediate Steps to Take

Report to The Police:

• Your first action should be to report the theft. 
• Use the non-emergency number (101) to inform the police unless the crime is in progress (in this case, call 999)

• They'll need your car's registration, make, model, and any unique features. 
• The police will inform the DVLA that your car has been stolen.
• You'll receive a crime reference number, which is crucial for the next steps.

Contact Your Insurance Provider:

• Next, call your insurance company. 
• Give them your crime reference number and the details of the theft. 
• They'll start processing your claim, which typically pays out the market value of your vehicle which will be based on its age, mileage, and condition.

Navigating Insurance Claims

Insurance claims for a stolen car on finance are a bit different. The insurance company will settle finance with your finance company first, and any leftover, surplus funds come to you.

However, it is very important that if you are in negative equity, which is when the value of the car on the market is less than the remaining car loan amount, you will likely need to cover the difference.

What are Your Legal and Financial Obligations?

Informing the DVLA

As mentioned, the police will initially inform the DVLA that your vehicle has been stolen. However, it is then your responsibility to update the DVLA. Once your claim is settled, you'll need to let the DVLA know the insurance company has taken over the responsibility of your car. 

‍Do this online or by sending part of your V5C document. You must also provide a signed letter detailing your vehicle's make, model, and colour, alongside your insurer's name, the payout date, and the total compensation amount received.

Continuing Finance Payments

You must continue your finance payments until everything is resolved with the insurance company. 

How Can You Avoid Negative Equity On a Financed Car?

Guaranteed Asset Protection, also known as GAP insurance, is an optional coverage for people with financed cars. It's designed to cover the gap between your insurance payout and the amount you still owe on your finance agreement if your car is stolen and you find yourself in negative equity.

While your ‘normal’ car insurance might only cover the current market value of your car, GAP insurance could potentially cover the remaining balance that you owe on your car finance agreement. It helps prevent out-of-pocket expenses for a vehicle you no longer have. It's an optional safeguard that you can consider, especially if you're concerned about negative equity.

For more information about Negative Equity and Different Types of GAP Insurance check out our other easy-to-digest articles!