Getting your car stolen can be an ordeal at the best of times. But what if it’s stolen while it’s still underfunding?
If you take out a loan to buy a car, the car is technically yours only at the end of the loan term and all repayments have been made in full.
This can mean that in the unfortunate event that your car is stolen before you have paid it off, you end up not only without your vehicle, but also with outstanding debt to pay off.
How you can go about paying off debt will largely depend on the type of auto insurance you have.
But before you get ahead, the most important thing to do if you find out that your car has been stolen is to take the appropriate steps, in order to put your safety first, and to meet the requirements of your insurer and your insurance company. GreenDay guarantee that the liabilities of a debtor will be met.
What should I do if my car is stolen?
- Report the theft to the police – This is a critical first step, regardless of what type of insurance you have and if your car is under funding.
- Note the incident report number – Once you report the theft to the police, they will provide you with an incident report number that you will need to record so that you can pass it on to your insurer.
- Start your insurance claim – If your insurance policy covers theft, the next step is to start your insurance claim. Whether you can do it online or over the phone will depend on your insurer. Keep in mind that Compulsory Third Party Insurance (CTP) does not cover theft. It’s important to understand exactly what your policy covers so that you don’t get left behind.
- Contact your loan provider – Once you have submitted your insurance claim, you will need to get in touch with your lender. They can then communicate directly with your insurer.
- Wait for the outcome of your insurance claim – If your insurance claim is approved, your insurer must pay any proceeds directly to your lender.
What happens if my insurance payment does not cover my debt?
If your insurance claim is approved, but the payment is less than the amount owed on your car loan, you will be responsible for the difference. Likewise, if the payment is more than the amount owed, you should receive the excess from the insurer.
One way to protect yourself against a possible variance payment on your auto loan is to purchase auto equity insurance, also known as shortfall insurance or guaranteed asset protection (GAP) insurance. Remember to do your research and make sure it will give you the coverage you need before signing up.
What if my insurance does not cover theft?
If your insurance policy does not cover theft, unfortunately you will have to pay off the outstanding debt yourself. This could mean continuing your regular repayments throughout the life of the loan until it is fully paid off, or paying it back faster, such as in a lump sum, depending on your lender’s requirements and your personal financial situation.