Hi all
Quick question:
Can someone confirm (or deny) that when buying a new car the dealer must offer GAP insurance by law? (My dealer has asked me twice if I want it. And I don't.)
Regards
Paul
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I doubt it has to be offered by law, probably more a company policy as its a nice earner. BUT as soon as it's mentioned its the promotion of an insurance product so is governed by FSA regs which means paperwork and sometimes form filling.
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The dealer is offering it not because of any law, but because he makes a huge profit on the sale of GAP insurance. Same is true of paint and upholstery treatments.
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Can someone confirm (or deny) that when buying a new car the dealer must offer GAP insurance by law?
see
www.honestjohn.co.uk/forum/post/index.htm?t=63043&...e
Report the dealer to Trading Standards, or the FSA.
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Thank you jbif, for your reply, I shall be sure to mention this when I collect the car...
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Just as many travel agents will tell you it is a legal requirement to have travel insurance-it isn't-just strongly recommended.
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Just reading that link above reminded me that the Toyota pricing system was set up to automatically include GAP (and supaguard) in their "on the road price" for a new vehicle.
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No - legally they don't need to offer GAP insurance.
Bit like PPI - the dealership makes a nice profit from selling over-priced GAP Insurance policies.
If you have a relative who is a Civil Service or Post Office employee - you can join the Civil Service Motoring Association. Through CSMA you can access GAP insurance by Car Care Plan for around half the cost of the dealer schemes. Car Care Plan are the biggest GAP Insurance supplier in the UK - many manufacturer schemes are through Car Care Plan.
For example our CSMA GAP insurance for each of our cars cost £ 178 for the three year policy, compared to £ 340 through Mazda
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If you are buying a car with finance with a high LTV and thus a high risk of negative equity (i.e. the car is worth less than you owe on outstanding finance) then I can see it being a condition of the finance - but not a matter of law. Have you been confused, OP?
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Hi Mapmaker
No it's a cash sale with a £1,000 part-ex thrown in too.
Kept going on about GAP and even drew me a graph explaining what it did re: deprecation.
Even though I said I'M NOT INTERESTED.
They also tried to sell me an "enhanced" delivery package which includes carpet mats and extra fuel.......
Paul
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Going back 3 yrs now, I had to sign a document saying that I'd been offered various financial products, including GAP, and had refused them, when I bought my Merc from MB Direct.
There was no pressure or anything - they just went through the products, I said no, he put crosses next to them, and I signed.
In this day and age (and even 3yrs ago) it does make some sense - I'm sure there are people who write their cars off and swear blind they were never offered GAP.
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I was offered GAP insurance when buying my new car but I refused, I know that my fully comp car insurance offered to replace my new car for another new car (same model & options) if I had written it off in the first year, not sure if that's common on other policies?
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not sure if that's common on other policies?
It is pretty standard (2 yrs with NFU, I think, and maybe others) but it does only apply if you're the first registered keeper, so it excludes pre-reg, ex-demo etc.
GAP generally covers 3yrs (or longer) too.
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I was offered/explained about GAP ins on my 2008 Citroen when the deal had been finalised. He also said it was a requirement of the law that he mention it.
I told him that he should have told me about GAP, before the deal was struck & so declined his offer, which was £499 for RTI & VRI GAP ins.
I think it is a good thing, if buying a new car, or one a couple of years old, but you need to shop around if you want it, as I've got the same cover for £253 giving me RTI or VRI
cover for 4 years, whichever is the greater.
BeeJay
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I told him that he should have told me about GAP before the deal was struck & so declined his offer which was £499 for RTI & VRI GAP ins.
BeeJay
Correction, the price was £399, so still quids-in at £253.
BeeJay
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Think its an FSA requirement that they have to offer it. Have always been offered it, and asked to sign to state that I have been offered it but declined.
Think its regulated in the same way as life insurance on mortgages
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The general consensus is that it has to be offered by law. This came in as a requirement by the FSA in 2005.
The dealer has now to offer it, but you pays yer money & takes yer choice.
I've read of a BMW dealer charging over £1100 GAP ins on a £32000 motor.
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I can't see anything on the FSA site that backs this up. Where do you get your information from, Kanberlingoo?
I'd have thought it's the other way round: if the motor dealer sells insurance products he is subject to FSA regulation.
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I can't see anything on the FSA site that backs this up. Where do you get your information from Kanberlingoo?
Google "Martins Money Tips" then GAP ins. I tried to copy & post the link to the relevant item, but couldn't get it to transfer, only the home page pasted. It's a fairly long discussion, but a lot of relevant points are raised.
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The general consensus is that it has to be offered by law. This came in as a requirement by the FSA in 2005.
The general consensus is then wrong.
Car dealers can sell cars without offering any financial products if they wish.
If however they offer financial products which fall within the remit of the FSA, then they are regulated by the FSA.
There is absolutely no requirement to mention GAP to anyone. Refer to my first post in this thread.
"Saturday March 10, 2007 The Guardian
Commission-hungry salesmen are making new car buyers sit through sales pitches for insurance by falsely claiming that Financial Services Authority rules require it.
Several buyers have reported the trend. As they sign for their new car, the salesman tells them that recently introduced FSA rules require that they tell them about gap insurance.
The FSA told Guardian Money this week that no such compulsion exists. "
Edited by jbif on 25/06/2008 at 23:46
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Companies, when agreeing finance with a customer should ensure they have all the information they need to make an informed choice on what package is best for them. 99% of dealers will be non-advised selling and therefore the customer has to decide themselves.
As someone who spend quite a bit of time with my head in the FSA handbook for PPI/GAP in auto loans for a major player in the market and credit/store cards, it is not a requirement to mention it, however it is certainly good practice and arguably falls under the 'Treating Customers Fairly' principles.
You have to think of that 1 customer who you didnt offer it to, crashes their car 3 months later and then finds out that the finance policy could have included GAP insurance. If they werent told about this at the point of sale they would have a case against the finance house/appointed representitive(dealer).
It really should only be mentioned though and then leave it with the customer to probe further and ask the questions.
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