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Refinancing after your car is written off

Mar 28, 2022 | Stories

Just because your car is written off doesn’t mean your loan is too. Find out what it means to have a car written off and how a car loan refinance may be able to help pay out the balance of your existing loan and purchase another car.

Having a car written off is an upsetting experience, no matter who you are or what type of vehicle you drive. It can be especially upsetting if it is the result of an accident while you were behind the wheel.


At Finance One, we sometimes receive enquiries from customers who still have a car loan but no longer have a vehicle due to it being written off. While it’s generally a requirement of a secured car loan to hold comprehensive car insurance, in some circumstances the insurance payout is not enough to cover the cost of the existing car loan, and finance is required to purchase another vehicle.

If your car has been damaged so badly that it can’t be repaired (or isn’t financially viable to repair), Finance One may be able to help.

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What happens when a car is written off?

When a car is so badly damaged that no amount of repairs will make it safe to drive again, it is considered a “statutory write–off”.

This is different to a “repairable write-off”, where it may be possible to fix the car but the cost of repair outweighs the amount it is insured for. When this happens, your insurer will usually take the car and pay you out.

If your car is fully paid for, having it written off isn’t such a problem financially (providing you have comprehensive insurance). You simply take the insurance money and purchase a new car. But things can become more complicated when you are still paying off your car loan.

Here are a few things you can consider:

Contact your car loan provider

When a car under finance is written off, the insurer is obligated to pay the outstanding amount of the loan to the car loan provider. Unfortunately, after taking the excess and insured value into account, there is sometimes a shortfall and the loan balance cannot be repaid in full.

Get in touch with your car loan provider as soon as you can, as they’ll be able to tell you what options are available. If you still have money owing on the loan, it’s a very bad idea to stop making your car loan repayments as you could end up with bad credit, such as a default listing your credit file.

This is where refinancing your car loan with Finance One may help to payout any outstanding balance and provide the funds for you to get back on the road in a roadworthy vehicle — second time’s the charm! Contact our friendly team today to discuss what your options may be.

Challenge the write-off

One option (although not always successful depending on the condition of the vehicle) is to challenge the write-off. This option is only available for a repairable write-off.

To be successful, you will need to be able to prove that your car can be economically repaired. With enough research, such as getting statements from smash repairers, mechanics, salvage yards, and the like, this may be possible.

You will also need reliable evidence and confirmation of the market value of your car. Online services like redbook.com.au can help with establishing the market value. If you really believe that your car can be repaired at a reasonable cost and you have the evidence and know-how to back it up, this is a good option. Sites like autoguru.com.au and dinggo.com.au can be a great help to get you back on the road.

Generally, when a car is written off, the insurer will keep the vehicle. In some cases, you may be able to apply to keep the car after you’ve received your insurance payout. Speak to your insurer about the terms and conditions around this option. Usually, your payout will be reduced by any salvage value of the vehicle. So you will receive a lower payout, but it might be worth it to you to have your written-off car back.

Keep in mind, if you are planning on repairing your written-off car, it will need to be deemed road-worthy before it can be registered again.

If you think one of the above scenarios would be good for you, you should speak to your insurer immediately to discuss what options may be available to you.

Getting back on the road — refinancing your car loan

If your car is written off and you can’t challenge the decision for whatever reason, there may still be options.

In a perfect world, your insurance will cover the cost owing on your loan, but this is not always the case. Sometimes your insurance value is just not enough to cover the balance of the loan. So what happens next? You may be able to refinance your car loan.

In this case, Finance One can speak to you about what options for refinancing your car loan may be available to you (even if your original car loan provider was someone else). Even though the car has been written off, you still need to repay the loan — and you’ll also likely need to buy another car. Car loan refinancing for the written off vehicle may help kill two birds with one stone (or loan). When you refinance to a new car loan, the previous loan will be paid out, you’ll have finance to purchase your next car, and the car loan term can be tailored to your needs to keep the whole process affordable. A car loan with a balloon payment, for example, might help to reduce your monthly repayments. Read our blog for more information about balloon payments.

Because you’ll be paying out your original loan sooner, there may be exit fees to consider (loan providers often include an exit fee for compensation for the ongoing fees and interest payments they’ll be missing out on). But don’t stress — Finance One can take a look and your original car loan and figure out refinance terms and options that may be able to suit your needs. And who knows, depending on the interest rates, your new loan might even end up saving you some money over the long term! While the circumstances aren’t great, it might be a tiny silver lining if you’re able to save some money after you’ve written off your car.

But don’t stress — Finance One can take a look and your original car loan and figure out refinance terms and options that may be able to suit your needs. And who knows, depending on the interest rates, your new loan might even end up saving you some money over the long term! While the circumstances aren’t great, it might be a tiny silver lining if you’re able to save some money after you’ve written off your car.

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Getting back on the road — when your existing car loan is paid in full

If you are in the fortunate position where your existing loan is paid out in full, you may need a new loan to purchase your new car. Take the time to speak to our team. We pride ourselves on customer service and understanding, and will take the time to discuss options for a loan that may suit your circumstances.

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As a final note, once you do have a new car, it may be worth considering motor equity (or gap) insurance. This specific insurance is designed to cover the difference between the amount of your loan and the insurance payout, should your new car be written off sometime down the track. Take the time to talk to your insurer about the specific details and protect yourself from any further financial setbacks. For any further information regarding gap insurance policies, please contact your insurer directly.

Finance One is a non-bank lender that provides opportunities for everyday Australians to finance and refinance vehicle purchases.

Get in touch to find out how we may be able to help you with car loans.

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Disclaimer: The information above is of a general nature only and does not consider your personal objectives, financial situation or particular needs. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your particular circumstances.  We do not accept responsibility for any loss arising from the use of, or reliance on, the information. All new loan applications are subject to normal lending criteria. Fees and charges payable. Terms and conditions apply.

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Makala Elliott

Makala is the Marketing Manager at Finance One. She has worked in the Finance and Lending industry for over 10 years, gathering a wealth of experience. She is passionate about helping Australians get back on track with their finances by passing on her knowledge.

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