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  • FIRST POST
    • trinalouise
    • By trinalouise 1st Sep 18, 7:33 PM
    • 1Posts
    • 1Thanks
    trinalouise
    My car might be getting written off and it isn't my fault. My car is on finance have gap insurance
    • #1
    • 1st Sep 18, 7:33 PM
    My car might be getting written off and it isn't my fault. My car is on finance have gap insurance 1st Sep 18 at 7:33 PM
    Can someone please explain what happens in the following situation?

    Someone has crashed into my car today whilst I was not in it. They have admitted full liability, but it looks like a write off. We are just waiting for confirmation. I don't understand fully what happens now. This is what I think will happen, if someone could confirm or correct me please, I would be so grateful.

    These figures are not exact, just estimates.

    I bought my used car just over a year ago for £6000 on finance, which with any added extras and interest came to about £8,000. I paid a £200 deposit and I took out gap insurance.

    I am guessing that what will happen is:

    They will value my car at say: £4000. That amount is paid to my car finance and my gap insurance covers the missing amount, for example the remaining £4000.

    So, I am left with no debt but no car either.

    If this is true, I canít see how it is fair. I been paying off my car for over a year now and have paid back around £2,400 so far. If my thinking is right, I am left with out any money to buy a replacement car and will have lost the £2,400 I have paid so far.

    I really hope I am wrong! I would be very grateful for any help!
Page 1
    • Aretnap
    • By Aretnap 1st Sep 18, 11:56 PM
    • 3,233 Posts
    • 2,810 Thanks
    Aretnap
    • #2
    • 1st Sep 18, 11:56 PM
    • #2
    • 1st Sep 18, 11:56 PM
    As far as insurance goes (whether you claim through your own policy or the third party's) you should expect the market value of you car, ie the money it would cost to buy a car of the same type, age and mileage from a reputable dealer. That's the loss you've suffered as a result of the accident - the amount you're entitled to doesn't change depending on whether you originally bought the car with cash, on finance, on a credit card or received it as a gift. If the car is a year old then unfortunately yes, this is likely to be less than you paid for it and possibly else's than the amount outstanding on finance - cars do lose value over time after all.

    Some people see this as"unfair" and expect to be "put back in the situation they were in before the accident", but they miss the point that this is precisely what the system is intended to do. Before the accident you had a car which was worth (say) £4K and a debt that needed paying off. After the accident you have £4K and a debt that still needs paying. The precise terms of the debt repayment are between you and the finance company and aren't the responsibility of the third party or his insurer. And if you could claim the outstanding debt AND the cash to buy a new car, you'd be in a much better position than you were in before the accident, and we'd all be hoping that our cars get written off before we pay off the finance.

    The GAP insurance is a top up which protects you from the situation where you end up with less than the outstanding finance (depending on the type of policy it may also top up the payout to the £6K you originally paid) but yes, it's unlikely that once you've paid off the finance you'll be able to go out and buy replacement car with cash. However presumably you could get one on finance again (which would leave you more or less where you were before the accident, especially if you bought a car which was a year older than last time and with a year less on the finance)
    • antrobus
    • By antrobus 2nd Sep 18, 1:24 AM
    • 16,629 Posts
    • 23,554 Thanks
    antrobus
    • #3
    • 2nd Sep 18, 1:24 AM
    • #3
    • 2nd Sep 18, 1:24 AM
    ...

    If this is true, I canít see how it is fair. I been paying off my car for over a year now and have paid back around £2,400 so far. If my thinking is right, I am left with out any money to buy a replacement car and will have lost the £2,400 I have paid so far...
    Originally posted by trinalouise
    You bought a car for £6,000. A year later it's worth £4,000. That's depreciation. Plus you have the interest to pay on the finance. That's your £2,400; the cost of owning that car for the year.
    • daveyjp
    • By daveyjp 2nd Sep 18, 9:23 AM
    • 7,918 Posts
    • 6,496 Thanks
    daveyjp
    • #4
    • 2nd Sep 18, 9:23 AM
    • #4
    • 2nd Sep 18, 9:23 AM
    If you have a car worth £4,000, this is what you get back.

    Your problems may start when the insurance company value it at £3,000 and the GAP company argue it should be £4,000 in an effort to reduce their liability.

    You then become piggy in the middle while insurance and GAP companies play their game of arguing over who should pick up the £1,000 difference. All the while you have no car and no pay out.

    Keep on at them so you don't end up waiting months for a resolution.
    • MovingForwards
    • By MovingForwards 2nd Sep 18, 10:09 AM
    • 673 Posts
    • 774 Thanks
    MovingForwards
    • #5
    • 2nd Sep 18, 10:09 AM
    • #5
    • 2nd Sep 18, 10:09 AM
    Your car will be valued at book price nit dealer price, tends to be lower than the open market price.

    It's a few years since I have dealt with RTAs so I cannot remember what the book is insurance companies use.

    You are best off spending time searching for like for like cars for sale with dealers/private sales and screen printing the adverts to show how much it would cost to replace yours. This is so when you get the offer from your insurance company you can show them why you should have more than they offer.

    Gap insurance has been covered above.

    You will not get any money to replace your car as this will go back to the finance company.

    Once it is sorted and everything paid off you can then look for a replacement car and either use your savings (if you have any) or apply for finance.
    • Quentin
    • By Quentin 2nd Sep 18, 12:21 PM
    • 38,357 Posts
    • 22,328 Thanks
    Quentin
    • #6
    • 2nd Sep 18, 12:21 PM
    • #6
    • 2nd Sep 18, 12:21 PM
    Your car will be valued at book price nit dealer price, tends to be lower than the open market price.....

    .
    Originally posted by MovingForwards
    No


    The correct valuation is the market value of the car immediately prior to the incident


    This is the amount it would cost to replace with a similar model from a showroom
    • Jlo31
    • By Jlo31 2nd Sep 18, 4:36 PM
    • 88 Posts
    • 32 Thanks
    Jlo31
    • #7
    • 2nd Sep 18, 4:36 PM
    • #7
    • 2nd Sep 18, 4:36 PM
    Just checking is your gap insurance regular gap to cover short fall to what the insurance pay out and what you owe the finance company or is it return to invoice gap insurance that will bridge the gap to between what the insurance pays you and what you originally paid for the car?
    • Begsey
    • By Begsey 2nd Sep 18, 10:01 PM
    • 95 Posts
    • 49 Thanks
    Begsey
    • #8
    • 2nd Sep 18, 10:01 PM
    • #8
    • 2nd Sep 18, 10:01 PM
    Your car will be valued at book price nit dealer price, tends to be lower than the open market price.
    Originally posted by MovingForwards
    We've had a couple of vehicles written off in the past year, both offers were slap bang in the middle of valuations from Autotrader, bought from a dealer.
    • lostinheaven
    • By lostinheaven 5th Sep 18, 3:51 PM
    • 218 Posts
    • 115 Thanks
    lostinheaven
    • #9
    • 5th Sep 18, 3:51 PM
    • #9
    • 5th Sep 18, 3:51 PM
    Can someone please explain what happens in the following situation?

    Someone has crashed into my car today whilst I was not in it. They have admitted full liability, but it looks like a write off. We are just waiting for confirmation. I don't understand fully what happens now. This is what I think will happen, if someone could confirm or correct me please, I would be so grateful.

    These figures are not exact, just estimates.

    I bought my used car just over a year ago for £6000 on finance, which with any added extras and interest came to about £8,000. I paid a £200 deposit and I took out gap insurance.

    I am guessing that what will happen is:

    They will value my car at say: £4000. That amount is paid to my car finance and my gap insurance covers the missing amount, for example the remaining £4000.

    So, I am left with no debt but no car either.

    If this is true, I canít see how it is fair. I been paying off my car for over a year now and have paid back around £2,400 so far. If my thinking is right, I am left with out any money to buy a replacement car and will have lost the £2,400 I have paid so far.

    I really hope I am wrong! I would be very grateful for any help!
    Originally posted by trinalouise
    I think you mean:
    • The bought a car for £6,000
    • Over the WHOLE term of your finance agreement you'll pay back £8,000 in total for that car (the "Total Amount Payable")
    • Your car has been written off and you expect your motor insurer will pay out £4,000 as the current value of your car
    Something to keep in mind is that if you have a Total Amount payable for £8,000 - that's a figure that only applies if you take the whole term of the finance agreement to repay the funds to the finance company.

    For example, if your original finance agreement was a 5-year finance agreement but you're now settling after just a year, you don't have to pay all 5 year worth of interest and fees. Rather, your settlement figure will be calculated based on the length of time it took you to repay the loan.

    If your total amount payable under the loan was £8,000 and you've already paid circa £2,400 then we know that the remaining balance due is £5,600 but this doesn't take in to account any additional rebate that you'd get for settling early. But I'll use that £5,600 for the sake of an example.

    Quite what happens with GAP insurance will depend on the type of GAP insurance that you have.

    FINANCE GAP INSURANCE

    Will aim to pay the difference between your motor insurance payout (£4,000) and the finance settlement figure (£5,600) - this being a sum of (in this example) £1,600.

    The ultimate goal of this type of cover is to leave you at "zero" - no car, but no debt.

    INVOICE GAP INSURANCE

    Will aim to pay the difference between your motor insurance payout (£4,000) and the original invoice price that you paid for your vehicle (£6,000) from which you'd settle the remaining finance (£5,600) and be left with £400 to take forward against the cost of purchasing a new vehicle free of any debt from the previous one.

    Whilst it may seem that you're losing out on the £2,400 that you paid in instalments already, you're not. You agreed to borrow £6,000 for the purchase of a car and payback £8,000 in return. You've had the use of the vehicle for over a year. That vehicle has now been written off but you still owe the finance company the money that you originally borrowed plus some interest and charges etc.

    Without GAP insurance of any kind, based on your numbers above, you'd be left with no car and a debt of circa £1,600 to fund before you could consider a new car.

    With GAP insurance, at worst your debt should be cleared leaving you to start again with a new car and hopefully you could start all over again with a new car on a new finance agreement based on a similar values and just £200 upfront again.

    At best your debt to the finance company is cleared and you'll be left with money to use against the cost of starting a new finance agreement on a new car - in the example above, £200 more than you started with!

    HTH
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