Can I get PCP payment protection?

If my partner is half way through a PCP agreement and dies, what is the legal/financial position? Is it possible to insure against such a scenario eg payment protection?

Asked on 7 February 2024 by ANTHONY

Answered by David Ross
If you have a personal contract purchase (PCP), hire purchase (HP), personal loan or any other kind of borrowing to finance your car, that debt remains payable even in the event of your death.

If you have a guarantor, they will become responsible for the finance agreement, just as they would if you were unable to make your monthly payments. If you took out a joint agreement then the other person becomes fully responsible for paying off the debt. In most other cases, your debt will become part of your overall estate after your death. If you have a will, your nominated executor is responsible for managing your financial affairs, including your car finance debt. If you do not have a will, an administrator will be appointed – usually a next of kin.

For whoever is in charge of the estate, the process for settling the debt will become part of managing all the expenses of the estate — just like your mortgage and other debts. If they want to keep the car, this can usually be arranged if they agree to take over the contract and payments.

The finance company offering the PCP may be able to supply insurance that would settle the debt in the event of a death, or you could source insurance to cover this eventuality yourself.
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