If you recently received a settlement for a financed vehicle, you may have been surprised to find that your auto insurer's check wasn't made out to you. Since another party has an interest in the vehicle, your insurer was legally obligated to include that party's name on the check. Unfortunately, this means that you can't use the money that you've received without taking certain key steps. If you fail to take these steps, you could suffer some serious financial consequences. In certain circumstances, you might even face criminal penalties. Before you do anything with the check that you've received, take a moment to assess the situation.
You have several distinct options. First, you could try to take the check to the auto repair shop that's working on your car. Some body shops have the ability to cash checks made out to third parties. Since the staff members at the shop are legally obligated to forward the unused proceeds to your vehicle's lien-holder, your insurance company probably won't object to your decision to do this. If the body shop mishandles or misplaces the check, it will be liable for your repair costs.
Some body shops prefer not to accept third-party checks. Given the amount of risk that the practice involves, this is understandable. If your body shop won't take the check that your insurance company issued, you can send it back to your insurance company with the body shop's repair estimate. At the same time, you should instruct your insurance company to send you a check that's made out to the body shop. The company's claims department should have no problem with this. However, you should understand that you won't see any of the unused funds. Once your insurance provider cuts a check to your body shop, it will send the unused portion of the settlement to your vehicle's lien-holder. On the bright side, this means that you won't have to make a car payment for a decent amount of time.
If you would prefer not to pay for your car's repairs at all, you'll need to send your entire check to your lien-holder. Once the lien-holder receives the check, it will cash it and use the proceeds to reduce the balance on your auto loan. Depending upon the size of the check, this could significantly improve your financial outlook. As long as you're comfortable with driving a damaged vehicle, this may be the most prudent course of action.