If you have a no-fault accident in a financed car, do you have to continue making payments for the outstanding finance?

My friend had a car accident while negotiating a roundabout. The other driver admitted liability. The car has been written off and is financed via the dealership (Toyota). They have been told to carry on making payments until everything is sorted out. The car was purchased for around £12,000 and, after the accident, it was valued at £8000. With the car being financed, will the dealership recoup the money from the other party's insurance? Will my friend need to carry on with making payments for the £4000 outstanding or re-finance another vehicle?

Asked on 20 April 2018 by Robin Garner

Answered by Honest John
Nothing to do with the dealership. The finance owed is between your friend and the finance company. The accident occurred on a certain date, and it is from that date the loss occurs. If your friend has been deprived of their vehicle, they are entitled to an alternative vehicle. Does your friend have gap insurance? This would bridge the gap between the settlement and the finance owed. If they do not, then it would be up to your friend to pay the remaining finance owed. This means they would need to keep paying it until settlement is received, then claim these payments back.
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