Used car warranty and Gap insurance - worth the money?

Peter.Siffredi

Hi,
I'm buying a used Skoda that's 3 years old with 17,000 miles on the clock. The car price is £25K from a used car dealer, although Parker's and Glasses guide value the car at £21,500 (however you can't actually buy this car with its specifications for under £25K anywhere in the UK).

I'm reading the small print on the extended warranty (extra 2 years for £350) and it states a claim limit of £2000. At the moment, I'm not sure if that's per claim or overall warranty limit. If overall, £2K doesn't seem like much on a £25K car (I'm querying that point with the dealer). I'd be interested in hearing other members views and experiences on used car warranties.

I'm thinking of turning down GAP insurance, which effectively pays out the difference between what my insurer is likely to offer me in a write-off scenario (around £21K) and my purchase price. The GAP insurance is £350 over 3 years, but I'm thinking of declining as GAP is less valuable with used cars. Is this a sensible choice?

Thanks
Pete 

DullGreyGuy

Peter.Siffredi said:

I'm thinking of turning down GAP insurance, which effectively pays out the difference between what my insurer is likely to offer me in a write-off scenario (around £21K) and my purchase price. The GAP insurance is £350 over 3 years, but I'm thinking of declining as GAP is less valuable with used cars. Is this a sensible choice?

So you are considering RTI insurance...

Is it worth it really depends; in 2 years and 11 months your car is written off... are you happy buying a new 6 year old car (which is what your motor insurance in theory enables)? Would you have the spare cash to buy another 3 year old car?

Where is your model in the cycle? If you have the current model and next year a new one is released the value of your car will crash meaning a total loss settlement is suddenly much less.

Where do you believe we are in the cycle? RTI just before Covid was a terrible buy as second hand prices shot up meaning invoice price wouldnt buy a replacement but at the peak of second hand values it was a much better buy as in the event of a claim you could buy a higher model replacement.

GAP is not much more or less valuable with second hand cars, like all insurance its ultimately.a gamble and if the odds stack up depend on both your guess as to where the market is and your intentions in the event of a total loss.

facade

I'd go for GAP insurance, but not for £350, you can get it under half that if you source it yourself, or have 5 years worth for the same sort of price. (You want Return To Invoice GAP)

I have a friend who bought a new RAV4 and had 5 year GAP cover, and had the good fortune to get it written off (no injuries) in the final year!

This meant he got all his money back, so he had a new car for over 4 years for nothing.

(This was in The Days Before The War when cars lost 25% when you drove them off the forecourt, and 10% every year after. I think it is a safe bet that cars are going to lose value now we are used to The War)

Stubod

Like any insurance, gap insurance is really worth it if you total your car during the time you have it….otherwise it's not. What you decide is really up to you…..do you feel lucky??

SaverRate

Shop around for GAP insurance! Then worse case tell the dealer the cheapest price you can get it for and see if they will match it

lopsyfa

I wont buy the warranty but I will buy the GAP. GAP is not less on valuable on a used car. In fact, the newer the car, the lower the gap payout relative to the invoice price.

I bought a used car in 2018 that was written off a year later and got £4750 from the GAP insurer. The GAP only costs about £140 if I remember correctly.

As already mentioned, don't buy from the supplying dealer. Try other providers https://www.moneysupermarket.com/car-insurance/gap-insurance/