GAP insurance on cars – is it worth it?


Hi all,

I have a question about GAP insurance.

I have just purchased a new car on finance (0% interest) with a small deposit, pm payments for 36 months and a final “balloon payment” at the end, which can also be cleared by handing back the car in good condition +/- getting a new car and finance plan.

The dealer strongly recommended that I purchase “GAP” insurance to cover any discrepancy between any renaming finance and the value of the car in the event of a write-off. I have not done so yet, but am considering it. I have 90 days to do so and the dealer was asking for £299 (I hear you can buy it cheaper elsewhere).

Two things are giving me pause:

1) My “regular” insurer says that as my car is brand new I have full value replacement cover for the first 12 months, i.e. if my car is written off I effectively get a new one. Does this mean GAP insurance is only viable in the second year?
2) My last car (also on finance) had significant positive equity when I “traded in”, meaning the value of the car was higher than the final payment agreed with the dealer – I was able to incorporate this into my new plan… surely if the value of my car was higher than the final payment then GAP insurance is not worth it (this may be more of an issue on this car as I had less of a deposit).

Any experience with GAP insurance? Worth the money?

Any help / advice appreciated. Thanks.

Last edited by lunacity; Today at 7:01 PM.

Reason: removing some detail


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