GAP insurance

drbukar

Hi 
My first time doing a PCP and I had never heard of GAP insurance until the sales man mentioned it. The car is retailing for £15,000 at 10.9% APR..  my friend says I don't need the GAP insurance as I have comprehensive insurance.

Any experience from forum members? 

Vinknut

As with everything "it depends".

Comprehensive insurance, in the event of a write-off, will only pay out the current value of the car.  If you buy a car for £15,000, it's not worth £15,000 the instant you've bought it, it'll depreciate by about £2k (give or take) just driving it away.  So if you have a write-off accident on the way home, you'll only get £13,000 from the insurance and still owe the whole £15,000 on finance.

GAP insurance covers this £2k "gap".

It's up to you if you want to take that risk, and like most things motor-insurance, it's a sliding scale of how much risk you want to take on.

MikeJXE

Also if you take out Gap return to invoice insurance you are covered for 4 years the full amount you paid for the car no matter how much your car has depreciated. 

Merlin139

If you feel you need to buy it then don't be pressured in buying it from the dealer. 

Take a look at any of the insurance comparison sites and you will be able to get a quote.

Chief25

Merlin139 said:

If you feel you need to buy it then don't be pressured in buying it from the dealer. 

Take a look at any of the insurance comparison sites and you will be able to get a quote.

This!  I bought a car a few years ago for £6000 and got suckered into paying £1200 of gap cover with the dealership (£20 per month for 60 months)

I've recently leased a £45K car, and got my gap cover from a company called ALA (www.ala.co.uk) that came in at less than £300.

Don't be pressured into taking the gap cover from the dealer, it's probably massively inflated.

400ixl

Gap insurance is a massive profit making opportunity for the dealer if not checked as mentioned. Get the open market price and you will often find they will match it as there is still margin in it for them. So don't discount them from who you buy it from, just do the research and make sure you get the best deal from whoever can supply it.

When you friend says you don't need it due to comprehensive insurance is likely that many policies have a new for old in the first 12 months of the car being new. That likely doesn't apply from the years 2 onwards and you probably can't buy Gap to invoice insurance on a year old purchase.

martinbainbridge1975

gap insurance is worthwhile for peace of mind, however it can be sourced at better rates than offered by car dealers

easygap, insure the gap and ala are companies I have used in the past, you may also be able to source a better finance rate than offered by main dealers

martinbainbridge1975

Chief25 said:

Merlin139 said:

If you feel you need to buy it then don't be pressured in buying it from the dealer. 

Take a look at any of the insurance comparison sites and you will be able to get a quote.

This!  I bought a car a few years ago for £6000 and got suckered into paying £1200 of gap cover with the dealership (£20 per month for 60 months)

I've recently leased a £45K car, and got my gap cover from a company called ALA (www.ala.co.uk) that came in at less than £300.

Don't be pressured into taking the gap cover from the dealer, it's probably massively inflated.

Chief25 said:

Merlin139 said:

If you feel you need to buy it then don't be pressured in buying it from the dealer. 

Take a look at any of the insurance comparison sites and you will be able to get a quote.

This!  I bought a car a few years ago for £6000 and got suckered into paying £1200 of gap cover with the dealership (£20 per month for 60 months)

I've recently leased a £45K car, and got my gap cover from a company called ALA (www.ala.co.uk) that came in at less than £300.

Don't be pressured into taking the gap cover from the dealer, it's probably massively inflated.

spot on this is chief25, I got wise to this years ago about over inflated prices charged by dealers.

my current car I managed to source a 4 year return to invoice policy for £229 with a reputable broker so there are decent rates out their its having the awareness of where to look and buy from

Farmingtons

I have mine with a third party.  In the past I've gone back to the main dealer with my third party quote and they've matched it, but that's not happened on my last three cars.  It's a product that's worth having but only up to a certain cost.  For a couple of hundred notes as a one-off payment it's peace of mind.

MrFrugalFever

Dealers should not be ‘matching’ quotes/prices as that is technically incentivising which is against FCA regulations.

The reason a dealer is more expensive is because of the following;
- The sales person needs to make a living and gets paid a token gesture from the sale (remuneration for adequately explaining the product)
- The dealer is a business and will take a cut
- The administrator is a business and will take a cut
- The underwriters will want the lions share….
- If the need should ever arise, there should be sufficient support from both the dealer and administrator to ensure all goes smoothly in the event of an acceptable total loss

If you purchase via third party, it’s often a case of less fingers in pies so smaller costs. 

More often than not, the dealer isn’t that far away and it’s peace of mind that everything is ‘under one roof’.

Farmingtons

More recently the dealer has typically been nearly but not quite double but that's just a vague recollection without figures in front of me.  Strictly speaking, they didn't match when I went back to them but were only £30 or £40 so adrift so came down dramatically.  But yes, the "under one roof" argument is the reason I like it with the manufacturer/dealer policy as you get the feeling it will be sorted quickly were it ever called upon.  That said, I haven't subsequently lost any sleep not having such a policy.  Not had a total loss in 28 years of driving but I suppose every day without one brings one closer!