PCP write off

Iwishiwasmoneysavvy

Hi all

I purchased a car on PCP in October, the value was £8290, I part exchanged my car at £1750 so with GAP insurance etc the finance amount was £7208.

My car has been written off today and the finance company have set the final settlement fee is £6904.66.

Is there any chance the insurance company will actually pay out more than this because obviously because of the part ex it is worth more and without them paying out more I will be down a deposit on a new PCP agreement. I'm unsure how it all works as it's my first accident. It wasnt my fault, a 3rd party failed to give way and drove straight into the side of my vehicle, he failed to stop though so we have no details for him. The police are looking into it.

Any advice will be super appreciated, thank you!

DrEskimo

The insurance company will pay whatever they think the car is worth just before the accident. Since you have GAP, you need to let your GAP provider know as they will likely take over the negotiations of its valuation.

The amount you get paid out from the GAP insurance will depend on the type of GAP product you got. Do you know precisely what type it is?

If it is return-to-invoice GAP, then you will get whatever the shortfall is from the insurance valuation and the invoice price of the car. For example, let's say the insurance value the car at £5,000. The invoice price was £8,290, so the GAP insurance will pay out £3,290, so that you are now back at the £8,290 you paid for the car in October last year.

However it may only be finance GAP, which will only cover the shortfall from the insurance valuation and the remaining finance owed on the car. In this case, if the insurance only value the car at £5,000, and your settlement figure is £6904.66, then your GAP will only pay out £1904.66.

As you can see, the type of GAP is fundamental to how much additional pay out you will get.

Goudy

You financed other products with the car and you won't get the cost of these back.

What you bought was a car AND GAP insurance, then you paid for them by trading in your own car and financing the rest.

Now your insurance will pay what the car is worth at the time of the accident minus policy excess, as by the sounds of it you might have to pay the policy excess as there is no one to claim that back from, they !!!!!!ed off!
(You need to ask about this, as it's taken out of the settlement figure).

Now, as the good Dr wrote, your GAP may pay the difference back to invoice of the car, depending on what GAP policy you took out.

But this will not be the £7208 + £1750 as within that amount was the cost of the GAP policy,

If this GAP was bought through the dealer, it's likely it was quite expensive when compared to what you could buy elsewhere, so it's likely there's a chunk of what you financed you'll never get back.

So for an example, the car you bought was £8500 and the GAP was £450. Return to invoice GAP would get you back to £8500, not £8950.
You would get £6900 from your insurance and £1600 from GAP.

DrEskimo

Goudy wrote: »

But this will not be the £7208 + £1750 as within that amount was the cost of the GAP policy,

If this GAP was bought through the dealer, it's likely it was quite expensive when compared to what you could buy elsewhere, so it's likely there's a chunk of what you financed you'll never get back.

So for an example, the car you bought was £8500 and the GAP was £450. Return to invoice GAP would get you back to £8500, not £8950.

Ah yea I missed that. Good point, well made.

Iwishiwasmoneysavvy

Thanks both, I have spoken with my GAP insurance and they have confirmed its return to invoice amount. The £8290 was the invoice amount for the car without the gap insurance, the gap was 399 on top of that so should I still get the 1750 do you think?

DrEskimo

Iwishiwasmoneysavvy wrote: »

Thanks both, I have spoken with my GAP insurance and they have confirmed its return to invoice amount. The £8290 was the invoice amount for the car without the gap insurance, the gap was 399 on top of that so should I still get the 1750 do you think?

Oh OK. That's not that expensive, but I suspect you could have got it substantially cheaper online. Something to bear in mind for next time.

So if the invoice was £8,290, and the settlement is £6,904.66, then the payment from the insurance companies (main and GAP) will go towards settling that debt, and you will be left with £1,385.34. You will then have the excess deducted from that from your main insurance company as well I suspect due to the claim being made.

I think the main reason you are short of your original £1,750 deposit is due to the interest you have been paying...what sort of APR was the PCP finance at?

DrEskimo

Just out of curiosity, why is the finance amount £7,208, if the price of the car was £8,290 and the part-exchange price for your old car was £1,750? GAP accounts for £399, so what was the other £269 financed for?

Iwishiwasmoneysavvy

Ah OK thank you, I suppose I will have some form of deposit for a new car which is better than nothing!

The remaining must have been for the Gardx protection 🙄 really got my moneys worth there 😂

DrEskimo

Ha...yea definitely don't get that next time...! I've been a keen detailer for a while and those paint protection products that dealers flog are boarder line scams to me...sometimes they don't even apply anything....

As you say, you are not out of pocket. If you had no GAP you could potentially be looking at a bill for £1000+ to settle the finance, and then also looking for more money to buy another car. That £399 GAP policy has been worth a good amount!

When looking for your next car, feel free to post on here for advice regarding the car, the finance and all those extras. Plenty of good members with good knowledge on here.

Best of luck with it all mate :beer:

Iwishiwasmoneysavvy

Thank you so much for your help! So I will probably have just over £1000 after excess.
Definitely would like help with what to do next, currently paying £130 a month and I cant really afford any more than that, would like to stick with a PCP again though and needs to be a small automatic, not fussy at all!

DrEskimo

Iwishiwasmoneysavvy wrote: »

Thank you so much for your help! So I will probably have just over £1000 after excess.
Definitely would like help with what to do next, currently paying £130 a month and I cant really afford any more than that, would like to stick with a PCP again though and needs to be a small automatic, not fussy at all!

I'm probably not the one to ask...! I am not a big fan of PCP finance, as I find the interest charges are too high.

I would suggest looking at purchasing a much cheaper car, and using low interest credit cards or loans over short periods, with the view to overpay it as quickly as possible. You want to get to a situation where you are no longer paying anything towards the car, and can start paying yourself that £130 a month.