What to do if your car on finance is broken beyond repair

Experiencing an engine failure while still repaying car finance can be a daunting scenario.

In this blog, we’ll explore your rights under the Consumer Right Act 2015 and the various options available if you encounter a blown engine.

If your circumstances fall outside of the boundaries protected in the Consumer Rights Act 2015 we’ll also break down the potential costs associated with any repairs or replacement and how it may impact your insurance 👍

Got a specific question? Why not jump to:

• Your rights under the Consumer Rights Act 2015
• What if my case falls outside of the protection offered by the Consumer Rights Act?
• Is it worth fixing a blown engine?
• How much will it cost to replace an engine?
• Insurance considerations for engine failure
• Tips for handling engine issues in financed cars

Your rights under the Consumer Rights Act 2015

Experiencing engine failure can be stressful, but it's important to remember you have rights as a consumer. The Consumer Rights Act 2015 (CRA) offers protection if your car suffers from an engine failure within a specific timeframe. Here's what you need to know:

Eligibility

This Act applies to cars bought from a trader (dealership, online etc.) after October 1st, 2015. If you bought privately, unfortunately, the CRA doesn't apply.

Timeframe

You have 30 days from the purchase date to reject the car and receive a full refund if the engine failure renders it unfit for purpose, not of satisfactory quality, or doesn't match the description you were given. This applies even if you discover the issue after a few days of driving.

30 days - 6 months

In the event of an engine failure occurring within 30 days and 6 months of purchase, the law assumes the issue was present at the point of purchase and therefore the burden of proof is on the lender or dealership to demonstrate that the vehicle met the required standards of quality, fitness for purpose, and accurate description at the time of sale. 

After 6 months

You still have rights under the CRA, but the burden of proof shifts. You'll need to show the fault existed at the time of purchase, not due to misuse or lack of maintenance. This may require you to pay for an independent inspection to help prove that issues were present at the point of purchase.

Remedies

If the engine failure occurred within the initial six months or you can prove it pre-existed the purchase, you have the right to:

Repair or replacement

The lender must attempt to fix the engine at their own expense. If unsuccessful, they must offer a replacement vehicle of comparable value.

Price reduction

If you prefer to keep the car despite the engine issue, you can negotiate a price reduction to reflect the diminished value.

Full refund

If the lender cannot repair, replace, or offer a satisfactory price reduction, you are entitled to a full refund. If a repair fails or isn’t completed within a reasonable timeframe, then you’re also entitled to a full refund.

Seeking Help

If you're unsure about your rights or encountering difficulties with the lender or trader, don't hesitate to seek help. Citizens Advice or the Motor Ombudsman offer free and impartial advice on your consumer rights. Remember, the sooner you act, the stronger your position.

By understanding your rights under the Consumer Rights Act, you can navigate an engine failure with more confidence and ensure you receive fair treatment.

What if my case falls outside of the protection offered by the Consumer Rights Act?

There may be circumstances that leave you outside of the protection offered by the Consumer Rights Act 2015, for example if you have caused the issue or the problem was clearly not present at the point of purchase. In this case, there are still a few options available to help remedy your engine failure.

Begin by getting a qualified mechanic to assess the engine's condition. They will be able to provide a clearer picture of the damage.

You can then decide whether to repair, replace, or potentially trade-in the vehicle.

Next it’s worth checking in with your car insurance provider to review your policy and see whether any engine repairs or replacement could be covered.

Another viable option could be refinancing your current agreement. This could be an idea if you opt for a more expensive solution like a full engine replacement.

Is it worth fixing a blown engine?

The decision to repair a blown engine often boils down to cost versus value. If your car is relatively new and the rest of the vehicle is in good condition, investing in repairs can be a smart move.

However, if the vehicle has high mileage or other issues, the repair costs may exceed its current market value.

Compare the repair estimate against the car's worth to make the best decision. You should also calculate the cost of your new finance agreement if you plan on refinancing.

How much will it cost to replace an engine?

Replacing a blown engine can be costly. On average, engine replacements range from £1,000 to £4,000, depending on the make and model of the car, and labour costs in your region.

However, these are just ballpark figures. Obtaining multiple quotes from reputable mechanics can give you a more accurate estimate tailored to your specific situation.

Insurance considerations for engine failure

No two car insurance policies are the same. Some may include engine failure, while others don’t.

Standard third-party or collision cover doesn’t typically provide cover for engine damage unless it results from an accident.

If engine failure occurs due to factors like wear and tear, age, or poor maintenance, it may not be covered by your policy.

The main types of insurance that typically include engine failure are:

Comprehensive Cover

Policies with comprehensive cover can include engine damages under specific circumstances, like flooding. However, it’s essential to review your policy or check with your insurer.

Extended Warranties

If your vehicle is under an extended warranty, engine failures may be covered depending on the policy's terms.  It's crucial to be aware of any exclusions.

Mechanical Breakdown Insurance (MBI)

Some providers offer MBI, which specifically covers major mechanical issues, including engine failure.

Regularly reviewing your insurance policy helps ensure you understand the extent and limits of your coverage.

Tips for handling engine issues in financed cars

A car under finance with engine issues can pose unique challenges. Here’s some practical steps to help you navigate this situation:

• Chat with your lender: Always keep your lender in the loop. They may provide flexible solutions or even extensions, especially if you've been a reliable borrower.
• Have maintenance documentation on hand: Service records act as a testament to your commitment to the vehicle's upkeep. Regular oil changes, tune-ups, and other routine checks can be beneficial when discussing repair options or warranty claims.
• Research repair options: Obtain multiple repair estimates. This not only helps in giving you an idea of the cost, but also in understanding the extent of the damage.
• Consider refinancing: If repair costs stretch your budget, refinancing may offer more manageable monthly payments, or even a break to accumulate the necessary repair funds.
• Evaluate the vehicle's value: If the repair cost approaches or exceeds the car's current value, it might be more economical to consider trading it in or purchasing a new vehicle.

Remember, each situation is unique. Assessing your options and seeking expert advice will ensure you make the best decision.

If you do need to refinance or upgrade to a different vehicle, why not consider Carmoola? We offer fantastic rates, a fully online application, and clear and transparent pricing and terms 😄

Read more about car maintenance:

• How to Check and Top Up Your Car’s Engine Oil
• The Essential MOT Checklist You Need to Check Out
• A Guide to Car Dashboard Symbols