Why it pays to shop around for the best GAP Insurance deal
With the government extending its car scrapage scheme, as you might imagine business is brisk in car show rooms right up and down the country – and with so much money at stake it’s only right that buyers will want to protect their new purchases, the question is: at what cost?
Buying a new car is not a cheap process and the sad fact is that the second you drive your new pride and joy off the showroom forecourt, it starts to lose value. And as many of us don’t actually own the car at this point and often have years of payments ahead, more and more of us are signing up to something called GAP Insurance.
When you buy a car on finance, the car might cost £10k – and with the finance added on it could be £12k, but as soon as you drive the car away that £10k car is worth £8k – so you’ve actually got a £4k gap – and GAP insurance covers that gap.
Motor insurance covers your car and not the finance and insurance and the whole package.
Now covering yourself thoroughly in case of disaster seems to make sense, but as always the devil is so often in the detail – as 21 year old Stef Roberts found out:
'The reason why I bought a new car is because my old car broke down and I needed to get to and from work. I was really excited about getting a new car and everything.'
But when her boyfriend Peter checked the paperwork he was very surprised to see that Stef had signed up for 5 years GAP insurance and that surprise quickly turned to shock when he saw the bill:
'We were looking for ways to save money so we both looked through our car paperwork and we found that, to my disgust, she was paying £930 for the GAP insurance. We looked on a few price comparison sites and they had a very similar cover for less than £200.'
Yes, you heard that correctly, she was paying £700 more for her GAP insurance than she needed to, and according to Cliff Darcy she’s not alone in being ripped off.
'In theory, I think that GAP insurance is quite a good product because there is a risk that your insurer won’t pay out enough to pay off your loan or to get you the car that you thought you had at the time. But in practice it’s overpriced, badly sold and to me it’s a rip off'.
It seems that we’re so keen to get motoring that often we sign the dotted line in the dealership without first shopping around. So here’s what you need to do to ensure you get the deal that you deserve:
- Don’t accept the first deal you are offered. Shop around – I know it sounds simple but this could save you hundreds of pounds
- Always remember, most policies have a 14 day cooling off period, if you think you’re paying over the odds, put a stop to it!