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How to buy a car after a natural disaster

Waiting until the market stabilizes can help you avoid high prices and potentially damaged vehicles.

While replacing your car after a natural disaster can be a necessity, don’t rush into a big purchase before talking to your insurance company and comparing your car loan options first. You might also want to wait until the local market stabilizes so you’re not stuck with sky-high prices or a potentially damaged vehicle.

Step 1: Contact your insurance company.

Flooded car after a natural disasterFiling a claim is the most important step in recouping some of your losses if your car is totaled because of a natural disaster. Provided you have comprehensive coverage, your insurance company will reimburse you for damage caused by floods, fire or other natural events. You’ll only be responsible for your deductible.

If you have a car loan, your insurance company will pay your lender first. If there isn’t enough to pay off your car loan in full, you may still owe money — which means you’ll be responsible for making payments on the remaining balance, even if your car’s been totaled. However, Gap insurance can cover any remaining balance after your insurance company has paid out, so you should see if this coverage is part of your policy.

If you own your car outright or there’s money left after your lender’s been paid, your insurance company will pay you directly. You can then use these funds as a down payment for a future car. In the meantime, see if your policy offers free rentals so you can still get around while you’re shopping for a new car.

Why won’t my insurance cover the cost for another car?

There are 2 times you may not receive the full value of your car:

  • Your car has depreciated. If your claim cheque only covers your car’s value after depreciation, it may not be enough to buy an equivalent vehicle.
  • You weren’t covered. If you had a basic policy that didn’t include coverage for “acts of God” (natural disasters), your insurance won’t reimburse you.

Step 2: Create a budget for your replacement.

Even if you haven’t received your settlement yet, you can still start budgeting for your next car. Check on Kelley Blue Book and Edmunds for the value of similar used cars to check the market value of yours. While it won’t be exact, it can give you an idea of how much money you’ll receive from your insurance company — and if you’ll need to start saving for a down payment.

Once you receive your settlement, calculate how much you can afford to borrow with a car loan. This will guide you toward a new or used car in your budget so you can avoid overspending.

Step 3: Research your loan options.

Compare car loans before you visit a dealership to help you save. You can then use your best pre-approval offer as a tool during negotiations. Banks, credit unions and online lenders offer financing for new and used cars, typically at lower rates than you’d find at a dealership. And if you apply within the same time frame — typically 14 to 21 days — it will only count as one line on your credit report.

Compare car loans

Name Product Min. Loan Amount Interest Rate Loan Term Min. Credit Score Requirements
CarsFast Car Loans
4.90% to 29.90%
12-96 months
Min. income of $1,800 /month, 3+ months employed
Browse thousands of vehicles from dealers across Canada and get matched with financing that meets your needs. Apply online to purchase a new or used vehicle and get the vehicle delivered to your door.
Loans Canada Car Loans
0% to 29.99%
3-96 months
Min. income of $1,800 /month, 3+ months employed
Get access to financing from multiple lenders across Canada through a single application with Loans Canada. Bad credit, CERB and EI borrowers are considered.
Car Loans Canada
3.99% to 29.95%
12-84 months
Min. income of $2,000 /month, 3+ months employed
Search thousands of vehicles online, including $0 down options, from dealers across the country and get matched with affordable financing options. Auto loans are also available to those with bad credit, consumer proposals and bankruptcies to help rebuild credit.
Coast Capital Car Loan
18-84 months
Able to service debt payment of $300/month
Finance or lease both new and used vehicles with competitive rates and flexible terms from one of Canada's largest credit unions. No credit union membership required for this product.
Canadian Auto News
3.99% to 29.95%
12-84 months
Min. income of $2,000 /month, 3+ months employed
Answer a few simple questions to get matched with affordable financing options. Auto loans are also available to those with bad credit, consumer proposals and bankruptcies to help rebuild credit.
LoanConnect Car Loans
9.90% to 46.96%
3-120 months
No min. income requirement
Get access to 25+ lenders through LoanConnect's brokerage. Receive pre-approval in as fast as 60 seconds and get your funds in as little as 24 hours.
Canada Auto Finance
3-96 months
Min. income of $1,500 /month, 3+ months employed
Canada Auto Finance is a broker that connects borrowers with partnered local lenders. Financing for a new or used car is available for borrowers with bad credit, no credit, CERB, EI or bankruptcy.
Carloans411 Car Loans
1.90% to 19.99%
Up to 72 months
Min. income of $1,600 /month, 3+ months employed
Get connected with suitable lenders through CarLoans411. Finance your next car, van or truck with loans available in amounts from $500 to $50,000. Check eligibility for this loan through LoanConnect.
Fairstone Secured Personal Loan
19.99% to 23.99%
36-120 months
Established credit history and own your home
Fairstone offers secured personal loans up to $50,000.

Compare up to 4 providers

Step 4: Figure out what car you want to buy.

Start your research online with sites like the Canadian Black Book and These sites provide handy information about new and used cars in your area, which will make it easier to pinpoint a good deal. Once you know the type of car you’re looking for, you can start contacting dealerships. Keep an eye out for special incentives for buyers affected by a natural disaster.

When you find a car you like, give it a thorough inspection to ensure it didn’t sustain any damage itself. Natural disasters can bring out the worst in some salespeople, so you don’t want to commit to a car that hasn’t been properly examined for any safety or mechanical issues first.

If you’re buying a used car, be sure to get a vehicle history report first to double check the car’s maintenance and repair records for signs that the car might be a lemon.

Step 5: Try to wait it out until the market stabilizes.

The car market is often skewed after a natural disaster. Used cars are limited, and dealerships often raise prices due to the influx of customers wanting to replace their damaged vehicles.

If you can rent a car in the mean time, it may make the shopping experience easier. You’ll have the luxury of waiting until the market stabilizes, and you won’t feel pressured to buy a car that might have also been damaged.

Bottom line

Buying a car after a natural disaster can be a minefield of shady salespeople and previously damaged cars. But by doing your research, taking your time and comparing your car loan options, you can rest easy knowing you’ve done all you can to get a good deal.

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