Car Finance and PPI

rachellg23

Do I have to take PPI for a car I am purchasing on Finance?

Tixy

No, you don't.

rachellg23

He has said that the PPI will cover my loan if the car is written off. What would happen if I didn't take the PPI and my car did get written off?

meer53

Are they talking about Gap insurance ? It's not the same as PPI.

Tixy

Assuming its finance secured on the car, then you'd be asked to pay the balance in full straight away (though of course would hope to get some back from insurance).

If it wasn't secured on the vehicle then you'd need to continue paying the loan until its finished (or you could pay off in a lump sum).

In terms of the car being written off, you might want to look at GAP insurance, as that is what you usually covers your loan if the car is written off rather than PPI.

rachellg23

He definitely said payment protection. I will look into the GAP, never heard of that before.

iolanthe07

GAP insurance is generally a good idea, but don't buy it from the dealer, who will charge you an arm and a leg. Buy it independently.

Apples2

GAP is very important as the amount you will owe on the agreement will be significantly more than the market value of the car, which is all the Insurance will give you (if you are lucky enough to even be offered market value).
If you don't have GAP, you will have a large surplus to pay after the Insurance has paid out.

PPI simply protects your Monthly payments should you become too ill to work or lose your job. This has been a hot topic for some time now as the lenders (Finance companies, Banks etc) have been making huge profits from selling PPI to customers which was inadequate (it didn't pay out, or would not have paid out).

The people selling it, in your case the car salesman, is going to get a large commision for selling it. This is another thing included in the "hot topic", the fact that they said you MUST have it when in fact it is entirely optional.

We all take a risk when applying for loans/finance. Ask yourself how you will manage if you do lose your job. Could you still manage the repayments?

If you do decide you want PPI, you can search for it anywhere and likely get a suitable product much cheaper than the dealer is offering, but it will still cost you money each month to have it.

The only way to be safe is to save up and buy a car with cash instead of relying on finance/loans.

BJV

PPI is a personal choice. There has been a lot of bad press recently but it can help if the unexpected happens. Just be careful as some policies have so many exclusions that is is almost impossible to get a claim paid.

When it comes to gap insurance, before you look on line decide what you want your policy to do.

There are three main types that finance gap insurance, pays the difference between your vehicles valuation and the amount outstanding on finance.

Return to invoice pays the difference between your vehicles valuation and the the invoice price you paid.( just check as some are limited to a percentage of glass's guide and don't include paint protection or warranties)

Vehicle replacement pays the difference between your vehicles valuation and the replacement cost of another vehicle the same age mileage and condition as yours was on the day you bought it.

If it is a new car you are buying why not check if your own insurance company offers you new for old in the 1st 12 months as if they do you can buy a deferred policy and save more.

Bottom line gap insurance is all about you, you do not have to buy it and it is totally up to you where you buy it from.

So goes for PPI. ( although I have never had it myself ) I can understand why it could be good in certain circumstances.