With the current economic climate we find ourselves in, it is very common for car buyers to ask themselves this question: what happens to my vehicle finance loan if my car gets stolen?
With about 50 000 cars being stolen a year in South Africa, it is fair to assume that people who buy cars are at risk of having their vehicles stolen. This is an unfortunate reality for car owners in South Africa. If you’ve paid for your car using finance, then this is what you need to know if your car is stolen.
What will my car insurance cover?
It is mandatory in South Africa that no one can buy a car using finance if you do not have an appropriate insurance policy taken out on it. This is to ensure that the asset is protected from the time it drives off the showroom floor. If your car is stolen, your insurance policy should cover a portion of the original purchase price, depending on how the car was insured and for what amount.
Once your insurer pays you out, you can then use that money to pay off the outstanding balance of your car loan. If the money you are paid out by insurance does not cover the outstanding loan amount owing, then you will still be liable to cover all outstanding balances owed on the car.
Must I continue to pay my vehicle and insurance instalments if my car is stolen?
Depending on how long it takes for your stolen vehicle situation to be sorted out by the police, banks, and insurance companies, it is advised that you continue to pay your premiums until such time that the matter is sorted or unless otherwise instructed by your service providers. Tying up the loose ends can take time, and stopping your monthly payments can harm your credit record.
How to make sure you are properly covered with the correct insurance?
Having a car insurance policy that offers you comprehensive cover for motor vehicle theft is the way to go. There are several vehicle insurance companies that offer such packages. To ensure you are not out of pocket if your car gets stolen, it is advised that you have a policy that can cover you for all potential outcomes. Most of the time, when you purchase a newer model car, your insurance provider will recommend that you take extra cover called top-up cover or shortfall cover. This, in simple terms, refers to the extra cover one can receive in the event that there is a shortfall of monies paid out from the insurance provider to settle the loan agreement. This type of cover also reduces any extra monies that you would still be liable for in the event that your car is stolen.
Visit the Get Insurance section on our website, where you can browse insurance providers and extra valuable information about vehicle insurance.
Make sure you are always aware of all your legal obligations when entering into any finance agreement for a vehicle.
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