GAP Insurance

[AlexV70Drive1]

Originally Posted by Dohnut

I'm PCH'ing over 4 years.

In the event of a total loss am I right in thinking my insurer pays out to Volvo and I'm still responsible for any outstanding finance, making GAP cover advisable?

First time I've PCH'd and it rather unclear when searching the interweb.

Thanks

GAP insurance is a must if you want to cover yourself because the car you have on PCP will not be worth the total amount due to the finance company! The car maybe worth £25000 but the finance charges are another £6000 so that makes it £31000 owed to the finance company.

GAP insurance will fill the void in from what the insurance will pay out and what you owe to pay it off because the insurance will only pay out the market value which at the time you bought the car would be £25000 but you also have the finance charges bringing it up to £31000. The GAP is £6000 so the GAP insurance will pay out that to top up the insurance payout which together should be enough to pay back the finance company so you can then go and refinance another car and be on your merry way.

I understand that you can buy GAP insurance upto one year after you’ve bought the car on PCP or HP but don’t take my word for that and also DO NOT buy it from the dealer! They will charge you a lot more than if you got quotes online like I did, Volvo wanted double the amount when I asked. Also wheel and tyre insurance is another you might want to know about so get quotes for that too if you like but again the dealer will charge you more than the going rate.



PCP is pay monthly to own the car at the end if you want to own it. Just pay the ballon payment ‘optional final payment’ at the end of the term or you can hand the car back and walk away or you can use the car to trade in for a deposit on another one but I think that can only happen if the car is worth more than the value written on the contract the minimum value at the end of the contract, which will be the same number you will pay if you wanted to keep the car once the contract is finished.

Mine will be worth £10000 minimum after 4 years so I can either pay it off in cash or refinance it for the £10000 or I can trade it in and get a newer car and keep paying a monthly payment for another whatever amount of years or I can leave the car and walk away.

You’re right in saying you don’t own the car but you are technically working towards owning it but this way you pay less each month. The other way of paying it off means a fair amount higher payment each month but no ballon payment at the end so once your last monthly payment is paid you will own the car with no extra fees like a PCP. Also I believe the finance charges are slightly less than PCP.


If I have gotten anything wrong I apologise please correct me but that’s the way I understand it.

[Frankiee]

Hi Dohnut

So with PCH you only need to cover the shortfall and the outstanding rentals in the event of a total loss claim as the car is being hired to you. You really can’t have (or need) return to invoice GAP. If you’ve got PCP then Return to Invoice Gap is probably worth looking at.
DM me as I can supply this or point you in the right direction.
Full disclosure, I’m a car finance broker and also provide various types GAP cover via a third party.

[Dohnut]

To round this off I went with ALA - a fellow member messaged me with a Money Saving Expert discount code for 25% off (MSE25) which kinda made it a no brainer.

I would have purchased via them even without the discount if honest. They were super helpful and I genuinely beleive they offered the best product suited to my particular finance deal.

Thanks for all the input guys.

[CocoPops]

Glad it helped!

[TaffyJerseyBean]

Another vote for ALA. Thanks for the advice all.

They were super helpful explaining the differences between the return to invoice and vehicle replacement policies on offer. Feel confident that I have all bases covered should (god forbid) the worst happen. 25% discount was handy too.

[Frankiee]

Just out of interest what are people paying for Return to Invoice GAP ?

[Ulrikas PA]

Does an 'agreed value' policy do much the same ?

[TaffyJerseyBean]

“Agreed Value” GAP pays out any shortfall between the insurance company pay-out and the remaining money owed to the finance company should the payout be less than the settlement.

“Return to Invoice” GAP pays the shortfall as per “Agreed Value” GAP PLUS any cash deposit you paid into the deal upfront. This effectively leaves you in a “reboot” position to put you back as you were the day you ordered your car excluding any discounts or deposit allowance applied by either the dealer or the manufacturer.

I went for the “Vehicle Replacement” option which pays out enough money to 1) cover any outstanding finance as above and 2) put me into a brand new like-for-like replacement car regardless of cost. With this type of policy I can instead opt for a Return to Invoice payout if I wanted to simply quit and walk away, ideal if my circumstances change in the future and I wanted to downsize or not replace the car.

ALA were great at explaining everything before I took the plunge so I would recommend you call them. You can also obtain quotes via their website. Don’t forget the discount code “MSE25” for 25% off.

[Frankiee]

So what was the cost, after the discount for your GAP cover?

[TaffyJerseyBean]

Originally Posted by Frankiee

So what was the cost, after the discount for your GAP cover?

c£300 for 4 years give or take a few quid. Think it was c£260 for 3 years.