If You Are Buying a Car and Don’t Have a Money Tree Read This!

As competition for car sales increases the modern main dealership has to be hyper competitive on the cost of the car. Their overheads have not decreased, their cost base is as high as ever and all of this needs paying for. So in an attempt to claw back some of the lost profit they will most likely offer you a string of additional products from posh polish, to mats and gap insurance.

By offering you all of these products at the same time they are devaluing the benefits of each. Ok polish is polish and mats, well; you can have rubber or carpet – nothing new there!

But Gap insurance if explained properly and responsibly can and does save us the general public thousands and thousands of pounds.

So what is gap insurance? Well the real answer is: A supplementary insurance that protects against financial loss if your vehicle is written off.

Ok plain English: You have had you car for two years and it is stolen or involved in an accident and written off. Your own motor insurance policy will at best pay you your cars valuation on the day it is written off. Gap insurance can depending upon the cover you choose can clear outstanding finance including up to £5000 negative equity from a previous agreement. You could pay the difference between your cars valuation when it was written off and the invoice price you paid or pay the difference to replace the car on a new for old basis.

Let’s say you paid £15000 for your car. The motoring press says that the average car can lose up to 50% in the first three years. So two years later you car is valued at £7500. Imagine if you had paid finance? How would you feel paying for a car you can no-longer use? Even if you paid cash if loosing £7500 means nothing then ok. If like the rest of us mere mortals that would be a difficult amount to replace without having to dip into what ever savings you have you should consider gap insurance.

Most dealerships in the UK can charge anywhere from £395 to a staggering £895. But help is at hand by sourcing your policy from an independent broker you can reduce these costs by up to 85%. In fact the average cost of an on line policy is less than one month’s depreciation and can start from £39.00 for a years cover.

In most cases the type choice and levels of cover available from online sources is in fact comparable if not superior to that offered by main dealers. So better costs and absolutely no dilution of cover.

Before you buy from any on line source just check that the policy you are buying is fully FSA regulated? Is it backed by the financial services compensation scheme? Is the company that you are buying the policy from authorized to do so?

If possible find out who is underwriting the policy? Do they have experience in this field? Don’t worry if you have not heard of the insurance company in fact the UK gap insurance market is very niche and the household names have tended to get involved. Your may never of heard of some of the real big boys in this field?

Just Google them and check their field of expertise?

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