What to Do If a Financed Car Is Scrapped?
3 Answers
First, report to the police, and the traffic police will determine the accident liability and issue an accident liability certificate. The insurance company will process the claim for the scrapped vehicle based on the accident liability certificate, and the disposal of the vehicle will be decided by the insurance company. Since the subject matter has been lost, negotiate with the lending bank for early loan repayment during the claims process.
When my family's SUV, which was bought on loan, got into an accident and had to be scrapped, I had a headache for three days. The key was to first notify the bank or lending institution about the situation, as the car was gone but the loan remained. Then, I had to contact the insurance company to handle the claim settlement. After they assessed the damage, the compensation would be prioritized to pay off the remaining loan. If the compensation wasn't enough, I had to cover the difference myself; any surplus could be refunded. The scrapping procedure required a trip to the vehicle management office to obtain a cancellation certificate, which then had to be sent to the lender to complete the process. The whole ordeal took two weeks, and I had to make sure to have some emergency funds ready to avoid affecting my credit record. Car loan borrowers really need to be extra careful.
I've been through the process of a financed car being totaled twice, and the procedures were quite similar. The first step is to inform your lender about the vehicle's total loss—they'll provide specific instructions. Simultaneously, file an insurance claim; the claims adjuster will photograph and document the car's condition. It's best not to handle the wreck privately—let the insurance company arrange towing to the salvage yard. You'll need to personally complete the vehicle deregistration at the DMV, and must immediately courier the copy of the recycling certificate to your lender. What if the insurance payout doesn't cover the loan balance? That's when it gets awkward—last time my flooded car had low compensation, I had to cover an 8,000+ RMB shortfall myself. My advice: always add GAP insurance when taking out an auto loan—it saves a lot of hassle.
