Quick GAP insurance question

jediknight49

Just purchased myself a used car on finance from a dealership.
Took to dealership GAP insurance as the car was £7k, and wanted peace of mind in the event of a total loss within the first few years of the agreement.
Having done some research, I have found much cheaper products for GAP, so cancelled with dealership, but there seems to be a couple of options available: Return to Invoice+ and the other is Finance/Contract Hire. Not sure which one is applicable to me.
Can anyone advise which I should be looking at using?

This is the website:

http://www.directgap.co.uk


Cheers

Cornucopia

jediknight49 wrote: »

Just purchased myself a used car on finance from a dealership.
Took to dealership GAP insurance as the car was £7k, and wanted peace of mind in the event of a total loss within the first few years of the agreement.
Having done some research, I have found much cheaper products for GAP, so cancelled with dealership, but there seems to be a couple of options available: Return to Invoice+ and the other is Finance/Contract Hire. Not sure which one is applicable to me.
Can anyone advise which I should be looking at using?

This is the website:

http://www.directgap.co.uk


Cheers

I'd question whether anyone really needs gap insurance.

But if you do, you probably want "Finance/Contract Hire", which is what gap insurance is really for.

jediknight49

Thanks for the reply.

My reason for looking into the GAP is if the car is written off in an accident (having just lost my previous car in a total loss accident).
If owe on finance more than the book value of the vehicle, and we know insurers do not like paying out full value, then I would be out of pocket, and i can not see the point of continuing to pay for something I no longer own.

bluesnake

why would you buy a second hand car and pay much more than it is worth?

You must have bought something vastly overpriced, or with a really high depreciation

Ok, I am about to buy a second and car and pay more than it is worth, but I'm I think it has been looked after and it is a good specimen for its age plus it is £70 more than insurance estimate.

Cornucopia

jediknight49 wrote: »

Thanks for the reply.

My reason for looking into the GAP is if the car is written off in an accident (having just lost my previous car in a total loss accident).
If owe on finance more than the book value of the vehicle, and we know insurers do not like paying out full value, then I would be out of pocket, and i can not see the point of continuing to pay for something I no longer own.

I suppose the questions are: how large a gap could it be compared to the cost of the insurance premium, how likely are you to suffer another total loss, and how easily could you underwrite the gap yourself.

I'm not a big fan of insurance, generally. I must have paid thousands to insurance companies during my life, and received virtually nothing back in claims.

flashg67

Agree, the 'finance/contract hire' option will pay off any finance shortfall and is usually the cheapest option. You may end up with nothing if the worst happens, but at least you won't owe anything either.

One question to ask is how long to take the cover for? Depending on the length of your finance agreement, at some point, the shortfall will be very small, if anything at all. EG, no point paying for 4 years cover, if you'll be at 'break even' after 3 years?

jediknight49

£73 for 3year policy on 5year finance.
car price is not over inflated, and finance is only 8% apr.
just did not want to owe finance comp a chunk of cash, like 500 or 1000 quid, which i can ill afford.
i'll probably bite the bullet for the sake of £73.

Cash-Cow_3

8% doesn't sound the best rate or did you not borrow much?

jediknight49

Cash-Cow wrote: »

8% doesn't sound the best rate or did you not borrow much?

interest is 4.2% on £7k, so not bad a t all. 8% was the typical APR.