So you’re just about to buy your next new car. You have the deal you want, the part exchange value seems palatable, and you can’t wait to get your new car. Sound familiar?
Thousands of motorists choose to buy their cars from main franchised dealerships each year. This is mainly due to the fact that they have a wide choice of vehicles, often sold as part of the manufacturers used car scheme, they also provide warranties, a mechanical check, and an element of peace of mind for the consumer.
If you are buying a new car you will almost certainly have to visit a franchised dealer as most of the Internet based sellers are merely brokers acting as middle men between the consumer and franchised dealer.
Selling you a car is not the only thing the dealer has in mind!
Due to the current economic climate we live in, and the ever growing ease at which you can obtain information over the Internet, many dealers can no longer survive by selling cars alone.
Most car dealer groups have dedicated finance departments specifically designed to sell finance and insurance products such as gap insurance, extended warranties, tyre insurance and other insurance related products. Main dealers and car supermarkets now budget to make as much money from finance and insurance as they do from the actual car sale. Most car dealers will aim to make around £800 profit on every car they sell, whether new or used, with almost 50% of that profit coming from finance and insurance products.
The growth in popularity of these types of insurance products has resulted in dealers targeting their sales teams to sell gap cover on every car they sell. However, policy costs can vary dramatically when purchased from a car dealer or car supermarket.
So how much should you pay for a gap insurance policy?
Recently we carried out a survey of main dealers, car supermarkets, and a number of independent dealers and found a startling array of gap insurance prices.
The average cost of a gap insurance policy at main franchised dealers is around £399 for a policy that will cover vehicle replacement up to the value of £15,000.
Prestige car franchises such as BMW, Audi, Porsche and Mercedes appear to be exploiting the popularity of this type of insurance even further with prices as high as £1000 for a vehicle replacement policy. Most prestige franchised dealers calculate gap insurance prices based on a percentage of the vehicle selling price resulting in sky high policy costs!
Many dealers now employ Business Managers specifically targeted to sell finance and insurance. So don’t be surprised when you get the heavy sell! The dealer will want you to buy a gap policy and so will the sales person!
Buying on the Internet!
Like most things sold on the internet nowadays, you can save a lot of money when purchasing gap insurance from the growing number of online gap insurance providers. Cost savings from not having to pay rent on fancy showrooms combined with high commissions paid to the sales team’s means that the cost of buying a gap insurance policy online can be as much as 75% cheaper than a franchised dealer.
Setting up a gap insurance policy online is also very simple and can be completed in a matter of minutes by completing a short online application form. You can also speak to someone over the telephone if you have any questions or queries.
In addition to the cost saving, most of the online gap insurance providers make it very easy for you to select the correct policy for your needs with clear and concise product descriptions and key benefits as well as the obligatory T&C’s and policy details, which can all be downloaded.