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Refinancing after your car is written off

Mar 13, 2021 | 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 you might be able to refinance to pay out the balance of your existing loan and purchase another one.

Having a car written off (damaged so badly that it’s unable to be, or not financially worth, repairing) is an upsetting experience no matter who you are or what type of vehicle you drive, and especially 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 a requirement of most secured car loans 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.

The good news is that Finance One may be able to help.

Before getting into the nitty-gritty, let’s further consider what it is for a car to be written off.


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 writeoff.

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 (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:

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 for the market value of your car from the likes of redbook.com.au. 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 and sites like autoguru.com.au and dinggo.com.au can be a great help to get you back on the road.


Getting back on the road

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.

 In this case, Finance One can speak to you about options for refinancing a loan that is not fully paid off for a car that has been written off and so that you can purchase a new one. Your original loan doesn’t even have to be from Finance One.

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 a loan that may suit your circumstances.

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.

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.


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.


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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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