Gap Insurance.

[need_my_wedge]

Picking up a new car Friday, also turned down the GAP insurance offered. They wanted circa £450, but can get it for less than £200 elsewhere. The garage finance guy did warn me to check the terms and also to check any reviews on the companies in general as some are known to be slow in paying, or try to delay payment fro some time. He could be trying to scare monger, but equally good advice to make the extra checks up front.

 

[Smiffy]

Went to look at buying a new car on a PCP last night, salesman comes back with the finance quote
Salesman: "Oh btw I've added the Gap Insurance for you, because you'll need that in case of a shortfall" £399
From what I read elsewhere, and after reading Smiffys posts I believe this is not allowed?

He can "assumptively" build it in to the quote, but he MUST inform you that he has done so.
If you decide you don't want it, he is not allowed to put any barriers up.
It is your choice whether you want it, and YOURS only.
If he doesn't tell you he has included it, and you go on to purchase, he has mis-sold.
He would be hammered under the new FCA rulings of "treating customers fairly".

 

[Smiffy]

Picking up a new car Friday, also turned down the GAP insurance offered. They wanted circa £450, but can get it for less than £200 elsewhere. The garage finance guy did warn me to check the terms and also to check any reviews on the companies in general as some are known to be slow in paying, or try to delay payment fro some time. He could be trying to scare monger, but equally good advice to make the extra checks up front.

He is not scare mongering per se, but like most things in life you get what you pay for.
We use a company called "Autoprotect" who have been around for donkeys and are bullet proof.
Some of the guys selling GAP/RTI policies are one man bands and might not be there for you should you run into difficulties if and when you claim.

 

[need_my_wedge]

He is not scare mongering per se, but like most things in life you get what you pay for.
We use a company called "Autoprotect" who have been around for donkeys and are bullet proof.
Some of the guys selling GAP/RTI policies are one man bands and might not be there for you should you run into difficulties if and when you claim.

I wasn't saying he was scare mongering, just could be - seeing it from a point of view that he was trying to get me to pay more than double for his product , but equally, it was good advice. He also said pretty much what you've just added, so I appreciate it could be a bit of a gamble if you get the wrong company/ policy.

 

[KenL]

Shouldn't be allowed to "assumptively" build it in to a quote.

Not everyone is financially astute enough to know about these things and just want a car.

 

[Smiffy]

Shouldn't be allowed to "assumptively" build it in to a quote.

Not everyone is financially astute enough to know about these things and just want a car.

He is perfectly allowed to assumptively build it in.
He's just not allowed to not tell you.
Don't worry, you don't have to be financially astute.
He's astute enough for you both.

 

[Smiffy]

Not everyone is financially astute enough to know about these things and just want a car.

And that is why you are "advised".
How many times have I mentioned the three magic words on this thread "treating customers fairly?"
That is why you will sign a declaration at the end of the sale to confirm that
A) You were offered GAP/RTI
B) You decided to either purchase or decline said offer.
Nobody, repeat nobody is forcing you to take it out, they are just advising.

Imagine the scene.... two and a half years time, you're down the pub with your mate bemoaning the fact that you have just written your car off.
Cost you £30k it did, two and a half years ago, and your bloody insurance company have just offered you £12k. Life's not fair is it Ken. What can you do with £12k????
Then your mate says "Did the salesman who sold you the car offer you GAP insurance Ken? If you had taken that out you would now have your £30k back".
With that little bit of paper signed to say that you were offered it but declined it, you can't complain.
Without that little bit of paper, you, like thousands of others, could jump on the GAP equivalent of the PPI gravy train and take the dealership for all it's worth.
Times have changed. For the better.
Like I say, you don't have to be financially astute. We, believe it or not, are trying to protect you financially. Don't moan at us for doing our job.

 

[KenL]

After 2 and a half years a £30k car will be lucky to be worth £12k so what's the major problem?

 

[Smiffy]

After 2 and a half years a £30k car will be lucky to be worth £12k so what's the major problem?

So if you'd taken out GAP insurance your benefit would have been even greater!
Insurance company give you £10k then. GAP insurance pays out the other £20k.
Whichever way you do the math, you're going to get your £30k back.

 

[KenL]

Cash? Even though I may only owe £10k on the car?

 

[Smiffy]

Cash? Even though I may only owe £10k on the car?

You will receive one cheque from the insurance company for £10k and another cheque from the GAP insurance for the "shortfall" on what you paid for the car, in this instance £20k. So you have all of your £30k back.
Plus up to £250.00 of any excess you have had to pay.
So you can pay your finance balance off (£10k) and have £20k deposit left to put down on a new car, or even buy one outright.
Not such a bad deal after all is it?

 

[ger147]

You will receive one cheque from the insurance company for £10k and another cheque from the GAP insurance for the "shortfall" on what you paid for the car, in this instance £20k. So you have all of your £30k back.
Plus up to £250.00 of any excess you have had to pay.
So you can pay your finance balance off (£10k) and have £20k deposit left to put down on a new car, or even buy one outright.
Not such a bad deal after all is it?

I know there was some mud slinging earlier in the thread so I don't want you to mistake my question for any of that, it's a genuine questuon from a regular cary buying Joe Public.

If that is what it pays out, why is it still called Gap Insurance? In my normal every day Joe Public mind, when talking about "gap insurance", what that means to me is the difference between what I owe any finance company vs what I get from the insurance company. So if I owe £12k and the insurance gives me £10k, I would expect to get the £2k balance from any gap insurance I had.

What you have described is more than that, effectively a full purchase price cover while you are paying off any finance which is more than just gap insurance.

Do you offer gap insurance to punters who pay in full in cash at the time of purchase?

 

[Smiffy]

I know there was some mud slinging earlier in the thread so I don't want you to mistake my question for any of that, it's a genuine questuon from a regular cary buying Joe Public.

If that is what it pays out, why is it still called Gap Insurance? In my normal every day Joe Public mind, when talking about "gap insurance", what that means to me is the difference between what I owe any finance company vs what I get from the insurance company. So if I owe £12k and the insurance gives me £10k, I would expect to get the £2k balance from any gap insurance I had.

What you have described is more than that, effectively a full purchase price cover while you are paying off any finance which is more than just gap insurance.

Do you offer gap insurance to punters who pay in full in cash at the time of purchase?

Up until a few years ago, there were two types of cover available.
GAP (which was specifically targeted at Finance customers and did what you suggest above)
and
RTI (Return To Invoice) which was targeted at cash customers and paid them out the full invoice price that they paid for the car from new.
Now the products being sold are combined GAP/RTI products, that will pay out what is more beneficial to the customer.
If they are on finance and the settlement figure is higher than the cash price they paid for the car it will pay out under that.
If the RTI benefit would be more beneficial to them (as it would be if they owed less on finance than they paid for the car) then it would pay out under that.
Hope that makes sense???

 

[ger147]

Up until a few years ago, there were two types of cover available.
GAP (which was specifically targeted at Finance customers and did what you suggest above)
and
RTI (Return To Invoice) which was targeted at cash customers and paid them out the full invoice price that they paid for the car from new.
Now the products being sold are combined GAP/RTI products, that will pay out what is more beneficial to the customer.
If they are on finance and the settlement figure is higher than the cash price they paid for the car it will pay out under that.
If the RTI benefit would be more beneficial to them (as it would be if they owed less on finance than they paid for the car) then it would pay out under that.
Hope that makes sense???

Cool, thanks for that. The only time I ever had gap insurance was 15+ years ago and it was explained to me as the gao between what I owed vs an insurance pay out, hence the question.

A bit late to get it now for my near 5 year old Audi that I paid cash for but one good thing has come to light for me personally, namely that my wife has a new car on PCP and I didn't know I would be liable for the balloon payment as well if it gets written off, so I'm off to get some gap insurance to cover that.

So many thanks for the info, much appreciated.

 

[KenL]

Does anyone know what percentage of cars are written off within their first 3 years?
If it is 10% then GAP looks a good deal. If only 1 or 2% I would probably continue to take my chance and be without it.

My Audi A3 is 6 months old. Could I still buy GAP for it?

 

[Smiffy]

Does anyone know what percentage of cars are written off within their first 3 years?
If it is 10% then GAP looks a good deal. If only 1 or 2% I would probably continue to take my chance and be without it.

My Audi A3 is 6 months old. Could I still buy GAP for it?

We have a 90 day cut off from purchase of the car to purchase of GAP/RTI. But other companies online offer GAP/RTI so it's worth having a google and making a couple of phone calls.
You would be surprised how many cars are written off a year, but you can't really talk about percentages in a thing like this.
You never know when an accident will happen. It's the "what ifs" you are protecting yourself from.

 

[need_my_wedge]

From looking around, some GAP RTI can be purchased within 180 days of buying the car (assuming you haven't written it off).

On Smiffy's point above re: the gap paying 20K on a 30K car if the insurance company only pay 10K. On the couple of quotes I looked at yesterday, the ask the value of the car, and then do a recommended value to insure for, i.e. car worth £26K, the recommended value was £17.5K in the two quotes I requested. In 4 years time, if the car is written off, and the insurance company only pay £6K for example, I'm assuming the gap will only pay 17.5K?

 

[Smiffy]

From looking around, some GAP RTI can be purchased within 180 days of buying the car (assuming you haven't written it off).

On Smiffy's point above re: the gap paying 20K on a 30K car if the insurance company only pay 10K. On the couple of quotes I looked at yesterday, the ask the value of the car, and then do a recommended value to insure for, i.e. car worth £26K, the recommended value was £17.5K in the two quotes I requested. In 4 years time, if the car is written off, and the insurance company only pay £6K for example, I'm assuming the gap will only pay 17.5K?

That's correct. This is why you have to be careful where you buy from and make sure you are being quoted "like for like"

 

[KenL]

Just had a wee look into this.
Quote from ALA for £15000 return to invoice was £135.
System originally suggested £12500 and that was £134.
You can purchase up until car is 1 year old.
Seems like a good deal?

 

[IanM]

I was in the Land Rover main dealer on Saturday and looked at an ex demo Disco Sport. I asked them to email me a quote for PCP as I was in a hurry.

The car was top of book price, they offered me less than WBAC.COM for my Freelander (bought from them and serviced by them) and included Gap in the quote at £499.

Not sure they are trying very hard to sell me the car, are they?