Gap insurance, is it worth it?

burkitt1986

hi everyone, me the missus and our baba are getting a used C-Max from our local ford dealer and they offered us gap insurance which id never heard of as ive never owned a car just company vans. weve found some cheap quotes on line but are now weighing up what to do.

do most people have it?
how does it work?
and most important....
Do we shell out for it?

all advice welcome

thanks all
Rob

Johnmcl7

no

It seems something that's well advised for car finance as it covers the shortfall between what the car is worth and what is still owed on it. I was offered it on my car when I was buying it outright with the appeal being that if I wrote off the car, I'd get a top up on my normal insurance so I'd get the original value of the car rather than the current car.

I didn't take it as I thought it unlikely I'd write off the car and if I did, I'd be fine with getting the value of the car to buy something similar.

John

forgotmyname

Depends how much you pay for the car and how much you stand to lose if its written off.

The dealer will probably be more expensive so shop around if you do want it.

flashg67

yes

Like most insurances - if you don't ever use it, you could say it's wasted money. But with the potential depreciation on cars, it could be seen as a good way of protecting the difference between what your car is worth, and what your finance company settlement is, if the worst happens.

I bought it on my last new car - my general advice would be:-
-shop around - dealer policies are massively marked-up
-do your research and understand the different types available
-consider if you need it to cover the full term of your loan - the finance 'gap' could be minimal in the last year(s) of the loan.

I'd do some figures before buying too - how much are you borrowing versus the car purchase price? Could you cover the finance gap yourself if you wrote the car off before the loan was paid etc?

I chose to go through https://www.easygap.co.uk at the time because they were competitive and were offering interest free installments at the time - other providers are available!

burkitt1986

We're borrowing the full £7995 on the finance, and I'm liking the idea of this gap insurance the more I hear. Sound like in our position it would be a good idea as it would allow us to start from scratch if the worst happened. Thanks for the replies everyone, very helpfull

bodgerx

burkitt1986 wrote: »

We're borrowing the full £7995 on the finance, and I'm liking the idea of this gap insurance the more I hear. Sound like in our position it would be a good idea as it would allow us to start from scratch if the worst happened. Thanks for the replies everyone, very helpfull

Borrowing everything on a car without a very decent deposit is not a smart move.

You are in instant negative equity the moment you sign.

Put down at the very least the first few years of depreciation in cash, or even better, get the bank to pay you and save up and pay cash.

GAZ237

no

May I ask what car and year, you are buying for £7995?.

The dealer mark up is probably close to £2000, plus a nice kick back from the finance company.

With interest I expect you are paying well over 10k, for a car that's worth 6k as soon as you drive away from the dealers.

burkitt1986

Its all a bit of a learning curve for me having never bought one before so ill deffinately Pick up some tips on this one. We're trading in my missus old car for just over £1000 and buying a ford focus Cmax, it's 2009 and an ex motability car. Hopefully should be a good un. What did everyone think about extended warrantys?

scaredofdebt

no

Most insurance isn't worth it as the insurance companies make a profit QED.

However, it depends on how risk averse you are, personally I've never had to claim off any insurance I've ever had and even when I did try they wouldn't pay out.

So no, avoid insurance unless it's legally required.

AnnieO1234

Be very careful. If gap insurance was so great and really did as one saleswoman for Ford put it to me recently for a cash purchase on a used car, "puts you back to the position you are in today when you leave the showroom" there'd be a helluva lot of cars being deliberately written off to claim it.

Be very careful, shop around, do your homework.

burkitt1986

Thanks again everyone. Very insightful