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GAP insurance: why should I make a one-time payment?

27 October 2023

Written by Simon England

|  5 Minutes

Most car insurers will give you the option to pay for your insurance in two different ways; monthly or upfront. What option you choose depends on your personal circumstances and preferences, and whether you would prefer to spread the cost or pay all at once. It is a more common approach amongst car insurance companies to offer upfront payment, as this is usually cheaper. With Guaranteed Asset Protection (GAP) insurance, you also have the option to pay outright or pay monthly.

In this guide, we will discuss the benefits and downsides of paying for GAP insurance upfront, as well as how much you could be paying for your policy.

Can I pay for GAP insurance upfront?

Yes, you can pay upfront for your GAP insurance policy. Unlike car insurance, where the policy needs to be renewed annually, paying upfront for GAP insurance will cover you for the entirety of the policy period which can be up to four years. For example, an average single payment gives you three years’ worth of GAP cover should your car be declared a total loss, with no need to renew.

When building a bespoke GAP insurance quote, you will need to state how you funded the vehicle, when you bought it, how old the vehicle is, plus other important factors that contribute towards the final price. You will also be able to add extra optional insurance coverage, such as Tyre and Alloy Wheel Insurance and Scratch and Dent Cover. You will then be provided with a tailor-made quote, with the option to pay upfront and save money on additional fees.

To start building your GAP insurance quote with us, you can visit us here.

What are the benefits of paying GAP insurance upfront?

There are plenty of benefits when paying upfront for your GAP insurance policy. As previously mentioned, it is the cheapest way to fund your policy. When you pay monthly, you will have to pay interest, meaning the total amount paid will be more expensive than if you paid upfront.

When paying for anything monthly, it can sometimes be a noticeable deduction from your finances each month. When paying outright, you don’t have to think about paying anything further for your GAP insurance policy after this payment, safe in the knowledge that your vehicle is protected for the full policy period after just one payment.

Finally, when you pay upfront for a GAP policy, you don’t have to enter into a credit agreement, so it will have no impact on your credit score.

What are the downsides of paying GAP insurance upfront?

Although paying upfront for GAP insurance is the cheaper option overall, it is not always desirable, particularly alongside numerous other costs incurred when buying a car. Paying monthly for a GAP insurance premium can help you spread the cost without putting a larger dent in your finances, which can be less stressful.

Paying upfront may also put a strain on your finances should you need to make any unexpected payments afterwards. Making monthly payments can prepare you for this eventuality, reducing any stress that may occur as well as providing protection for your insured vehicle. Although paying monthly means you have to enter into a credit agreement, this could be a good way to build up your credit score. You can read more about making monthly payments and the various benefits in our previous guide here.

At ALA, all of our GAP insurance policies are tailor-made to suit you and your vehicle, providing you with a quote for both upfront and monthly payments. To discuss your policy further, you can get in touch with our team today.

How much does GAP insurance cost?

How much you could be paying for your GAP insurance policy depends on several different factors.

Which policy you choose can have an impact on your upfront and monthly payments. These policies include:

Pricing can also depend on the value of your vehicle and the term length of your policy, but you will usually pay between £100 and £300 for multi-year cover. For example, a financed car that is up to one year old with an original invoice price of £12500 would be £197.76 per year on average for a Vehicle Replacement Plus policy. When building a quote, you will be asked about the way you funded the vehicle, its mileage, age and the invoice price, all of which can affect your quote.

To see how much you could be paying for your GAP insurance policy, you can start building your quote here.

How can ALA help?

All of our GAP coverage policies at ALA aim to provide much-needed protection should your car be declared a total loss.

No matter whether your vehicle was written off or stolen, our policies will provide an additional payment to the market value settlement provided by your motor insurer. On Back to Invoice Plus, this is up to the original invoice price of the vehicle or the finance settlement figure whichever is higher at the time. For Vehicle Replacement policies, you will receive the difference up to the cost of replacing your vehicle or enough to pay off your outstanding finance payments. Contract Hire GAP insurance will clear your outstanding rentals on your lease, and Agreed Value policies will bridge the gap between your car insurance company’s settlement and the Glass’ Guide retail value of your vehicle at the time your policy was purchased.

To find out more about which policy is best for you, get in touch with a member of our team today to discuss GAP insurance cover.