How do lenders evaluate loan applications for cars with pending insurance claims?

Applying for a loan on a vehicle with a pending insurance claim, the lender will be cautious in their approach to your application. Lenders are concerned with determining the detailed condition of the car, and potential outstanding concerns with the vehicle that may affect it as a car with value, and as a safe car to drive. Because of these factors, the lender will take more time to analyse your loan application than they would on a standard used car loan.

The lender will first want to know the claim details, if the deal described is related to a minor scratch, a severe collision, and how extensive any damages were. If your car is damaged heavily, then the lender will want to verify the repairs needed to make the car safe and operational, and you may be required to provide repair bills, insurance claim status reports or certificates of inspection. This documentation will be useful for a lender to prove the car is fit for purpose, and that there are no outstanding issues.

If the claim is unresolved, or if your car was taken for repair, then a lender may reject your application, or retain it.

To help your chances, ensure you have your claim(s) resolved, and that you have all supporting documentation prepared. Being transparent and honest, and have complete and accurate information will all assist to help get approvals, and demonstrate to the lender you are a responsible borrower.