GAP for a lease car?

[VWDaz86]

Hi all, I'm having my first ever lease car next month. I'm happy and understand everything except for if it would be wise to take out gap?

I've had my cars and bikes on pcp and always get a gap policy online, and go for finance gap so i'm not left in a hole should anything happen.

Would appreciate peoples views on gap on lease cars and which type to go for if so, as im not sure if i'd be best with RTI/combined or finance gap?

thanks

[anonymous-user]

Get GAP specifically for contract hire:
https://www.ala.co.uk/gap-insurance/contract-hire-...

Other providers are available, etc

[Tomo1971]

I think that the biggest benefit is those that give an option to protect the initial payment. Have seen comments where people have said that their insurers have covered the loss direct with the lease company / finance house but the initial deposit wasnt covered

[Davey Blueeyes]

My company leased three Hyundai i10's and one was written off after three months. Insurance company just sorted it out with the leasing company and the contract was cancelled. I hear of people having to pay the remainder of the lease but does anyone actually know anyone that has had to do that.

Initial payment would be gone so if you've stumped up some large for the 1st payment it might be worth it for that? Personally I lease on no more than a 3 month initial for this reason and don't take GAP

[soupdragon1]

Davey Blueeyes said:

My company leased three Hyundai i10's and one was written off after three months. Insurance company just sorted it out with the leasing company and the contract was cancelled. I hear of people having to pay the remainder of the lease but does anyone actually know anyone that has had to do that.

Initial payment would be gone so if you've stumped up some large for the 1st payment it might be worth it for that? Personally I lease on no more than a 3 month initial for this reason and don't take GAP

Thats it in a nutshell.

And if you think of a deposit of say, £1,000, paying £150 or so to cover £1000 isn't exactly very good value for money.
If the car is knicked or written off, your regular insurance settles with the lease co. So you're really only insuring for your deposit....So keep the deposit low and no need for GAP.

[Tomo1971]

There is however so many combinations of insurance companies and lease financiers that it leaves enough doubt in the consumer if GAP on lease's is worth it.

If insurance companies can settle direct with the lease company with no issues, why do we constantly hear about them undervaluing when the car is purchased outright or financed by other means? Surely they (the insurance company) value a car the same regardless of whom the end customer is.....OR, do the lease companies factor this slight loss into their figures from the outset?

[Davey Blueeyes]

Tomo1971 said:

There is however so many combinations of insurance companies and lease financiers that it leaves enough doubt in the consumer if GAP on lease's is worth it.

If insurance companies can settle direct with the lease company with no issues, why do we constantly hear about them undervaluing when the car is purchased outright or financed by other means? Surely they (the insurance company) value a car the same regardless of whom the end customer is.....OR, do the lease companies factor this slight loss into their figures from the outset?

The leasing company seem to just want their money back, not necessarily the 'market value' that insurers tend to wave about. If you get a blinding lease deal it's likely the leasing company have stumped up maybe 60% of rrp on a batch which is why it's cheap to you. Their business model then sells the car at the end of the lease for market (auction) value and they make their money. If it's written off they just need £x back to tick their financial boxes and as they bought the car for significantly less than you could it's done.

Talking to a colleague about the example I gave of the Hyundai i10 above, it was a 48 month lease with 45 months remaining when written off. The insurance company made and offer to the lease company which was £400 quid OVER what the lease company needed back. Not only did they cancel the remaining lease (they had made their money in 3 months instead of 48) but they refunded the excess £400 odd quid back to the company!

I dunno if that's usual, but certainly what happened to us.

[VWDaz86]

Thanks for the replies, so I guess its a game of chance in a way? You are chancing that the insurance co. would cover the lease company costs and that the lease co wont come after you for the remainder of the lease payments.

Its a 1+35 deal @ £204pm so no big initial payment.

the lease contract states this:

contract said:

9.2 This Agreement will terminate on the date on which Ford Lease receives appropriate compensation from the Customer or the
Customer's insurers for the total loss of the Vehicle and the Rental on the Vehicle shall continue until that date. In the event of
the total loss of the Vehicle, please contact Ford Lease for confirmation of the termination cost.

Termination cost is defined as: All remaining unbilled rentals plus Ford Lease's predicted residual value of the Vehicle at the
end of the Agreement less any benefits accruing to Ford Lease in consequence of any such early determination. Where this
calculation is below the estimated Vehicle Market Value of selling the Vehicle at the time of a Total Loss quote, the estimated
Vehicle Market Value may be used.

In the event that the Customer's insurance does not cover the appropriate compensation for the total loss of the
Vehicle required by Ford Lease, the Customer undertakes to pay Ford Lease any shortfall. The Total Loss charge
does not reduce or otherwise effect any existing liability that you may have for billed rentals or other sums which
have become due and which are unpaid.

So this would suggest, that they will come after the remaining rentals?

[Davey Blueeyes]

VWDaz86 said:

So this would suggest, that they will come after the remaining rentals?

Maybe, but does anyone actually know someone this has happened to? Plus most insurers will basically replace a brand new car with another brand new car in the first year I think?

Be interesting to see if we can find someone this has happened to?