[CFonAir]

Originally Posted by jsh139

With the price of used cars nowadays, is gap insurance even really necessary?

As we use GAP insurance in the US, you shouldn't be putting yourself in a position to need it. GAP insurance, again at least as used in the US, means you're going to be underwater on your loan at some point. As someone who works in consumer finance, as far as I'm concerned, it means you're buying beyond what you can afford.

Don't get underwater on a car, of all things.

[Keefy]

Originally Posted by CFonAir

As we use GAP insurance in the US, you shouldn't be putting yourself in a position to need it. GAP insurance, again at least as used in the US, means you're going to be underwater on your loan at some point. As someone who works in consumer finance, as far as I'm concerned, it means you're buying beyond what you can afford.

Don't get underwater on a car, of all things.

The OP is from the UK, and as such it’s highly recommended as it obviously means something different here in Britain to bolster or to make up the difference between the insurance payout (of a total loss of the vehicle) and the cost of new like for like car.

GAP insurance (UK) has nothing to do with the finance deal, loans, credit or anything like that. So for UK buyers you’d be crazy not to have it when spending £65k on a car.

[bbb83]

Originally Posted by CFonAir

As we use GAP insurance in the US, you shouldn't be putting yourself in a position to need it. GAP insurance, again at least as used in the US, means you're going to be underwater on your loan at some point. As someone who works in consumer finance, as far as I'm concerned, it means you're buying beyond what you can afford.

Don't get underwater on a car, of all things.

This guy knows what's up. If you feel like you need GAP insurance you're over extending yourself financially and probably shouldn't be in a BMW.

[CFonAir]

Originally Posted by Keefy

The OP is from the UK, and as such it’s highly recommended as it obviously means something different here in Britain to bolster or to make up the difference between the insurance payout (of a total loss of the vehicle) and the cost of new like for like car.

GAP insurance (UK) has nothing to do with the finance deal, loans, credit or anything like that. So for UK buyers you’d be crazy not to have it when spending £65k on a car.

According to this, it's very similar to the US. Maybe the way their insurance calculates loss is more risky to the borrower, but the central concept is the same; it protects you from owing more than the payoff in the instance of a total-loss event.

https://www.money.co.uk/gap-insuranc...insurance-work

My point is, and maybe I'm not understanding something about how insurance payouts work in the UK, you should never be in a circumstance where you owe more than the vehicle is worth. If you can be in that circumstance, you're buying more than you can afford, and you should reconsider.

[avi66]

Originally Posted by CFonAir

According to this, it's very similar to the US. Maybe the way their insurance calculates loss is more risky to the borrower, but the central concept is the same; it protects you from owing more than the payoff in the instance of a total-loss event.

https://www.money.co.uk/gap-insuranc...insurance-work

My point is, and maybe I'm not understanding something about how insurance payouts work in the UK, you should never be in a circumstance where you owe more than the vehicle is worth. If you can be in that circumstance, you're buying more than you can afford, and you should reconsider.

You’re missing the point.

You pay £65k for a new car in the UK.
In 18 months it’s totalled and the insurer pays market value say £50k
You now want a new like for like car which now costs £70k
So, assuming you paid cash for the original car, you now need to find additional £20k between insurer payout and new car price.
In the UK, replacement vehicle GAP covers this difference.
No credit over extension.

There are different types of GAP cover, this is what I’m using -

https://www.ala.co.uk/gap-insurance/...ment-insurance

[CFonAir]

Got it. That's typically just an add-on or feature of standard auto insurance here.

As long as it's not covering an under-water situation, it makes some sense. I suppose it keeps you from being underwater on your next car, in the event of a total-loss event.

[avi66]

Originally Posted by CFonAir

Got it. That's typically just an add-on or feature of standard auto insurance here.

As long as it's not covering an under-water situation, it makes some sense. I suppose it keeps you from being underwater on your next car, in the event of a total-loss event.

A typical UK insurer doesn’t offer this is an add on, hence companies that specialise in GAP products.

[ColinDuff68]

Thanks for all your advice. I contacted ALA gap insurance and gave me a great deal the code does work!

[X3rd Time Is a Charm]

Originally Posted by bbb83

This guy knows what's up. If you feel like you need GAP insurance you're over extending yourself financially and probably shouldn't be in a BMW.

In the U.S.Unless you pay cash for a new or used car, if you finance it with out a substantial down payment, you're at a loss . A new car depreciates as soon as you pull off of the lot you're upside down . So how is paying a say , $600.00 one time fee for gap insurance that could save you Thousands of dollars is a No Bainer . As far as not being able to afford a BMW you only live once, this isn't an audition. Go For It ! Good Luck !

[bbb83]

Originally Posted by X3RD TIMES A CHARM

In the U.S.Unless you pay cash for a new or used car, if you finance it with out a substantial down payment, you're at a loss . A new car depreciates as soon as you pull off of the lot you're upside down . So how is paying a say , $600.00 one time fee for gap insurance that could save you Thousands of dollars is a No Bainer . As far as not being able to afford a BMW you only live once, this isn't an audition. Go For It ! Good Luck !

hey bro, i got some snake oil for those leather seats to condition them if you're interested

[CFonAir]

Originally Posted by X3RD TIMES A CHARM

In the U.S.Unless you pay cash for a new or used car, if you finance it with out a substantial down payment, you're at a loss . A new car depreciates as soon as you pull off of the lot you're upside down . So how is paying a say , $600.00 one time fee for gap insurance that could save you Thousands of dollars is a No Bainer . As far as not being able to afford a BMW you only live once, this isn't an audition. Go For It ! Good Luck !

And I should be a bit more gracious. There are a lot of people who are paying well above MSRP right now, because of supply constraint. I'm sure some of them are upside down immediately, even with a decent trade or cash.

[X3rd Time Is a Charm]

Originally Posted by bbb83

hey bro, i got some snake oil for those leather seats to condition them if you're interested

Hey Bro ,If you haven't used it , you don't know what you're talking about . Save it for someone else !

[bbb83]

Originally Posted by X3RD TIMES A CHARM

Hey Bro ,If you haven't used it , you don't know what you're talking about . Save it for someone else !

My trips to the finance office are quick and efficient. The answer is "no" to everything. I'm happy you're feeding the pigeons though.

[X3rd Time Is a Charm]

Originally Posted by bbb83

My trips to the finance office are quick and efficient. The answer is "no" to everything. I'm happy you're feeding the pigeons though.

Ok , thanks for all of your help on this forum Bro .

[TXGrey]

Originally Posted by bbb83

My trips to the finance office are quick and efficient. The answer is "no" to everything. I'm happy you're feeding the pigeons though.

Well, techhhhhnically, this concept is true/accurate, and I do agree with you…. HOWEVER, if you really want to split hairs on this, until recently, the rate of return on INVESTING the money someone would have used to pay down (or straight cash) for a car, would've been quite a bit better than my finance rate (assuming it was mid 2s or lower)…. So technically, one is better off financing the car and investing said amount of money in other things and it's a better use Of your cash. Now, financing all 100% of it tho, that's still a bit much (hence requiring the need for GAP), but still, it can be debatable in some aspects. But let's call it what it is here in the US, and so yes, that's not the scenario 99.8% of the people using GAP insurance are doing. 😬

[avi66]

In the UK many people take a monthly cash alternative option instead of a company vehicle. I’ve done this in the past and used the money to fund my own car for business use with minimal deposit. Hence, finance GAP is beneficial in this case if using PCP, and is not about overextending credit etc.

[TLEHMANN]

Gap insurance through your provider is usually really cheap. Every single person that leaves a dealership, unless paying a ton of cash, is upside down. When you're still able to get money at 2.29 or so from Credit Unions for money towards a vehicle why would you not finance every cent you could? Its so cheap.

Would I buy it from the dealer? No. Its a rip off from there, but it has its use case, and if you think it doesn't then you probably think every product out there is sold by a "snake oil salesmen".

The cost of my loan + gap insurance, while also not tying up the cash I have in a car, is worth way more than just dumping 70k into a vehicle outright.

[avi66]

Originally Posted by HollieU

Seems a bit steep but found our dealer was expensive also. After looking online I found Gapinsure.com where we pay about £8 a month for our £28K car.

BMW dealer is expensive and the cover is limited to back to invoice, which doesn't cover the cost difference between total loss insurance payout and the cost of like for like replacement car over the cover period.

What type of GAP is that, back to invoice, replacement vehicle etc ?

How many years does that £8 pm cover i.e. 36 x £8 for 3 years or 12 x £8 for 3 years etc ?

I went with ALA Replacement Vehicle GAP 4 years and discount code MSE20 gets you 20% off at present.