You would expect a GAP insurer to promote their product, sure. But right now we live in ‘interesting times’ for the motor industry and therefore it’s pretty important to do what you can to cover yourself for all eventualities.
Whilst car sales have dived off the edge of a cliff, all sorts of assumptions that the industry holds dear are at risk.
Consumers have embraced finance ‘purchases’ of new cars. A deposit + monthly payment secures a car for a set period of time. These affordable ‘PCP’ deals have helped ensure that the pretty lamentable car sales figures have not been even worse. However there’s a lot of evidence that many people are holding off purchases – caution about the economy, delays to wait for a better selection of cars that meet emissions standards or the next generation of electric vehicles all appear to play a role. And the impact on prices is pretty unpredictable.
In these volatile times it makes sense now, more than, ever to reduce risk. Say you are in the unfortunate position of writing off (or as the industry says ‘suffering a total loss’ of) a vehicle acquired via a PCP. Whilst your insurer will reimburse the value of that car at that moment in time, your finance and outstanding obligations will still need to be met.
But with the fluctuating fortunes of the car industry it’s increasingly hard to know what the true values of cars are (attractive discounts and deals abound to increase sales) or what the eventual values of second hand vehicles will be in future.
With uncertainty in second hand values on the horizon, it’s hard to know what that will be or how far your insurer’s pay out will go to meeting your obligations. And car finance companies are simply not going let people off the hook if they suffer a total loss.
So it makes sense to do what you can to mitigate risk. GAP insurance can be bought from online independent dealers (you can get an easy free online quote from Direct GAP here) at a fraction of dealership costs. It’s a sensible precaution if you’re committed to vehicle finance and a smart move to secure what you can in turbulent times.
By Beate Kubitz at 19 Jan 2019, 00:00 AM