New Car Purchase and GAP cancellation

phonic606

Hi -wasn't sure where to post, apologies if this is the incorrect forum...

I've just bought a new car on finance with GAP insurance included (haven't taken delivery of car yet) from a main Peugeot dealer. The GAP adds about £8 per month to my payments, and is shown as a separate Breakdown on my finance agreement.
The dealership has said that they are using the 'profit' they receive from me taking this GAP insurance policy to further discount the cost of the vehicle, and that if I decide to cancel I will need to sign a new agreement showing the price of the car without the extra discount they have given it, basically meaning that my monthly payments will only go down by about £3 and not the £8 the insurance is costing me.

Is this legitimate? If feels like they are just trying to maintain their profit margin. If i take delivery of the new car and then cancel the GAP insurance within the cooling off period, the finance company have said this would be fine and they would remove it from my agreement. This will obviously leave the dealer out of pocket (as I assume the finance company will claw-back the money they paid the dealer for me taking the policy).

Will the dealer be able to pursue me for payment for the 'profit' they had applied to the car as extra discount? This isn't formally specified anywhere on the order forms I signed so I would hope not, but I don;t really want an angry dealer on the phone chasing the money they have 'lost'.

visidigi

I doubt there's anything they can do about it if you do cancel, but if you do I would look out for an additional dealership for your car servicing and repair and warranty work, as doing it behind their back is only going to cause them to be angry..

somethingcorporate

And you lose the protection of the GAP insurance, which is pretty important for a new car.

Obviously you could go elsewhere for it...

phonic606

Thanks

It seems to be far cheaper elsewhere, I can get an equivalent policy for £99 rather than the £399 they are charging me (not to mention the £80 interest this policy produces over the 3 years of the car finance).

I've tried to be up front with them about not wanting it but they seem to be saying they would have to charge me more for the car I have already ordered. I've paid a deposit and even signed the finance agreement that states the price they are selling the car at - I'm not sure if retrospectively increasing the price of the car is legitimate or if it is just a case of them trying to protect the current level of profit margin... I'm assuming they make more than £300 profit on a £12k car!

visidigi

to be fair, I hope you bartered on the GAP - i was initially offered £599 for five years cover - I finally agreed to take it at £229.

That tells you the sort of markup and that would lend to the notion that they have offset the car in your policy - the thing is they won't change what you owe on that contract, they are probably talking about changing the contract and making the initial one void...

phonic606

visidigi wrote: »

to be fair, I hope you bartered on the GAP - i was initially offered £599 for five years cover - I finally agreed to take it at £229.

That tells you the sort of markup and that would lend to the notion that they have offset the car in your policy - the thing is they won't change what you owe on that contract, they are probably talking about changing the contract and making the initial one void...

Yeah that's exactly what the dealership said to me today - if I didn't want to go with GAP insurance they would need me to come back in and sign a new finance agreement, i.e. with an increased price for the car itself but with no GAP insurance.

I spoke to Peugeot Financial Services who said it would be fine to cancel the policy within the cooling off period and they would simply remove this aspect from my finance agreement (as it's listed separately anyway). I'm assuming at this point though, they would clawback the money that was originally paid to the dealer for selling me the policy.

I guess I'm just confused as to whether this is simply a case of the dealer trying to retain a set level of profit from selling me the car (or discouraging me from cancelling the policy), or if it is a legitimate and reasonable thing to happen.

So I'm basically left with 3 options:

1. Take the GAP insurance (which adds an extra £8 per month to my payments)

2. Cancel the GAP insurance before picking up the car (and so having to enter into a new agreement at a higher cost - this would save me about £3 per month from the cost in option 1)

3. Pick up the car as normal, the GAP policy will then start at which point I can cancel within the cooling off period and get a full refund of the policy. This would be removed from my finance agreement directly with Peugeot Financial Services and I would save £8 per month (but will also have a possibly angry dealer chasing me for the money that has just been clawed back from them!)

visidigi

I'd walk away if it was me - find another Peugeot dealer and renegociate the deal but this time work hard on getting gap down - then you can use the dealer you've currently got the agreement with to service your car and there wont be any agro

If you get a better deal from another dealer go back to yours and see what they will do.

Remember, dealer is not your friend. Dealer is evil :rotfl: