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Why should I pay monthly for my GAP insurance?

27 October 2023

Written by Simon England

|  5 Minutes

When it comes to paying for any kind of insurance, such as home or car insurance, many companies offer various ways to pay. Some drivers choose to pay annually, if a lump sum is affordable, to keep their overall premium down and to save them worrying about paying their insurance for another year. However, there is the option to pay monthly to spread the cost. With our GAP (Guaranteed Asset Protection) insurance policies at ALA, you can choose a way to pay that suits you.

In this guide, we will explore the benefits and downsides of paying for GAP insurance monthly, and whether monthly payments are the best choice for you. We will also discuss how our policies at ALA can help, especially if you’re worried about funding them.

Can I pay for GAP insurance monthly?

With ALA GAP insurance policies you have the option to pay monthly. Once you have built an ALA quote with us on our website, two annual prices will be shown: one for paying up front, and one for monthly payments. Although paying monthly will usually cost more than making a lump sum payment, there are useful benefits to spreading the cost which we detail below. All GAP insurance policies can be paid for monthly, including:

  • Back to Invoice or Return to Invoice GAP insurance
  • Vehicle Replacement GAP insurance
  • Contract Hire GAP insurance
  • Agreed Value GAP insurance

To start building your GAP insurance quote, and to find a price that works for you, you can visit us on our website here.

What are the benefits of GAP insurance monthly payments?

The biggest advantage of paying for GAP insurance monthly is that it allows you to spread the cost over an extended period of time. It can be impractical or difficult to pay a large amount up front, so opting for monthly payments can take some pressure off managing your finances. You can also avoid the risk of the upfront payment putting strain on your budget, leaving more of your money available to you in the short term to spend on other essentials.

Also, if you stick to your GAP insurance monthly repayment plan, you can improve your credit score. However, this repayment plan must be strictly followed and missing a payment could damage your credit score. No matter how you choose to pay for your GAP insurance, it has many great incentives that make it worthwhile. If your car is written off or stolen, ALA will bridge the GAP between how much your car insurer has offered you and the original invoice price of the vehicle. If you took out a finance agreement and these are higher at the time of claim, your outstanding car finance payments will be taken care of. If you opted for car leasing, we will pay up to 100% of the remaining rental payment on our contract hire policies.

To find out more, you can get in touch with us here.

What are the downsides of paying monthly for GAP insurance?

When you pay for GAP insurance monthly, you are essentially entering into a loan agreement with your insurance company. Therefore, monthly payments are higher due to the interest you have to pay. You may not notice this increase as the price is spread out, but it is still money that you could be saving annually.

Also, if you miss a payment or make one late, this can negatively affect your credit score. A bad credit score could limit your chances of securing a mortgage, credit card or bank loan. Therefore, before deciding whether to pay monthly or annually, you should consider your personal circumstances and what option would be in your best interest. For instance, if you make monthly payments to your car insurance provider, it may be tempting to arrange the same agreement with your GAP insurance provider. However, if you are still unsure, you should consult with our team first.

Do I get my money back if I cancel GAP insurance?

No matter whether you bought your GAP insurance policy up front or took out a monthly repayment plan, with ALA, you have the right to cancel your GAP policy at any time. If you are paying by direct debit, you should contact your insurance broker first.

If you cancel within the first 30 days, and you have not made a claim within this time period, you will be entitled to the full amount of the premium you have paid. If you cancel your GAP insurance policy within the first 30 days, you will be entitled to a pro-rata refund based on the amount you have paid up to that point in time. However, if your policy has been ongoing for more than 36 months, you will not be entitled to a refund.

No matter how much you have paid for your policy each month, this will be refunded to you if you meet the specifications mentioned.

How can ALA help?

At ALA, we offer monthly GAP insurance payments to help ease the pressure for our customers when managing their finances, and to provide an alternative to the burden of a one-off payment. We can discuss your options with you in detail to ensure you get the best GAP insurance policy for you. Our GAP insurance policies are suited to most vehicles, no matter how they have been funded or whether they have been bought from a VAT registered dealer or from a private seller. We will also match any cheaper GAP insurance policy found elsewhere.

To find out more about our GAP coverage policies, you can get in touch with us via our website today.