HP Finance and GAP Insurance - How does it really work?

bensewell82

Here goes. I bought a car last year which was a pre-reg so pretty much brand new but with a massive price cut.
The total cost of the car including finance interest is £15,519.60 (£12,582.00 Loan + £2,937.60 Interest)
I purchased GAP type insurance at £8.99 per month.
I've paid £3,103.92 off the HP agreement  so have a balance of £12,415.68.
So here goes.
I was crashed into and the car repair place says its close to a total loss and the car value is around £9.5k.
So I need to pay the full £15,519.60 to clear the debt and start again with a car.
So just wondering does the gap insurance take into consideration any payments I've made already?
Trying to work out if i get a clean slate or a bit of profit against any payments I've made.
I'd like to know this before ringing the gap people up as sometimes they might play a fast one.

DrEskimo

Depends what type of GAP insurance you have. Do you have the details? Is it finance GAP, return to invoice GAP or replacement vehicle GAP?

You won't need to clear £15,519.60 by the way. Your settlement will be based on the original loan amount (£12,582) minus any capital you have paid from your monthly payments so far (won't be a huge amount, as a bigger proportion of your monthly payment is going towards interest during the early stages of a finance agreement). 

facade

As DrEskimo says, depends on the GAP, but most are combined now, you won't get replacement vehicle on a pre-reg, so it should pay the highest of the difference between your insurance payout (£9.5k) and either the finance settlement figure (I don't believe it will be the whole £12415) or the invoice price (£12582 interest is not included).

So near enough £3000. Once you settle the finance, the rest is yours to use as a deposit on another car.

MX5huggy

Do not accept the valuation of the insurance company or even negotiate over it, the GAP insurance company will do this as it is they that will suffering the loss.