Mar 072017
 

Buying a new car is one of the biggest purchases we make throughout our lives. Such significant purchases tend to be preceded by considerable research from consumers, to help them decide what the best possible car for their money is, and to ensure it will meet as many long term needs as possible.

However, all the research in the world will have no impact in the event your car is stolen or involved in an accident which results in it being written off.

It is a sad fact that, despite all the saving and studying you might do prior to choosing your car, you can still fall foul of the actions of others once you actually own it.

Whilst personal safety should of course be everyone’s first priority, particularly after an accident, you may have to think about financial consequences as well if your vehicle is stolen or written off. Therefore, it’s wise to take measures to safeguard your bank balance.

To help you do so, Warranty Direct offers GAP insurance, which can contribute to cover the shortfall that can arise from your comprehensive motor insurer provider’s settlement.

Protect your finances with GAP

In the event of your car being stolen or written off by an act of a third party, there could be a potential for financial loss. The perfect way to guard against this potential financial hit is GAP insurance.

When a car is written off or stolen, the insurer will only pay out the market value of the car at the time of this event. However, in the case of new vehicles, depreciation over the first three years would reduce the value significantly from the initial price paid by the customer. A brand new car can depreciate between 15 – 35%* over the course of the first year and around 50 – 60% over three years, assuming a mileage of around 10,000 a year. So, a £25,000 new family car could be worth as little as £10,000 after three years.

This depreciation could lead to a potential shortfall of thousands of pounds if a claim has to be made, but if you take out GAP insurance, this should not be the case. GAP insurance is designed to cover the financial shortfall that can occur when a motor insurer pays out on a “total loss” claim. This is the term associated with cars that are stolen and not recovered or written-off in an accident.

Warranty Direct is able to offer three types of GAP cover, so before making a purchase it’s important to establish which is best for you.

  • Vehicle Replacement Insurance (VRI) will cover the difference between your motor insurer’s settlement value for your car and the cost of a brand new car of the same make, model, and specification. This product is ideal for owners of brand new cars.
  • Return to Invoice Insurance (RTI) covers you for the difference between your motor insurer’s settlement value for your car and the original price you paid for your car – the selling dealer’s invoice. This product suits purchasers of “nearly-new” or used cars, which are bought from a garage.
  • Return to Value Insurance (RTV) will cover you for the difference between your motor insurer’s settlement and the value of the car at the time you took out your GAP policy. This value is established from long standing and trusted vehicle valuation companies. This product is aimed at people who already own their car but would still like GAP insurance protection.

Like all insurance policies, Warranty Direct’s GAP insurance is subject to terms and conditions**. To find out more, please speak to one our friendly team on 0800 097 8838 or view online.

Theft Prevention

In addition to taking out GAP insurance, there are other measures that you can take to protect your property, whilst ensuring that your motor insurance cover remains completely valid. The theft of something you own is highly distressing, but it’s also an act whereby you’re immediately incurring a loss. With motoring technology advancing in all aspects in recent years, including security measures, car thieves are always thinking of new ways to commit crime.

In 2016, ukcrimestats.com reported 363,388 instances of vehicle crime***. Whilst this has been much higher in previous years, it’s important for drivers to know that there are measures that can be taken to minimise risk of theft.

There are some obvious precautions that we can all take such as locking your car and hiding your belongings; the amount of car thefts that are instigated by expensive belongings like a sat-nav or tablet being left on the passenger seat is alarming. Hiding them reduces the reasons a thief may break into your car.

There are also several means of adding to the security equipment already in place, such as using steering wheel, gearstick, and/or pedal locks. Whilst these are not always 100% reliable in their actual function, they can often put off a thief because of the extra effort required to disable them. Other useful security measures include trackers that you can fit to your vehicle, and wheel-locking nuts.

With this advice in mind, hopefully you will have enough guidance to help protect the financial and personal investment of your next car purchase – especially during this new registration period.

* Money Advice Service

** Terms and conditions apply, see website for product information.

*** See http://www.ukcrimestats.com/National_Picture/

Warranty Direct GAP Cover Insurance policies are underwritten by LAMP Insurance Company Limited, whose registered office is Suite 934 Europort, Gibraltar, company number 93562. LAMP Insurance Company Limited is licensed and regulated by the Gibraltar Financial Services Commission under the Financial Services (Insurance Companies) Act.

GAP Cover Insurance policies are administered by Warranty Direct Limited, Quadrant House, 20 Broad Street Mall, Reading, RG1 7QE, company number 3233010. Warranty Direct limited is authorised and regulated by the Financial Conduct Authority.

Oct 062016
 

When it comes to buying a car there are numerous factors to consider, and ultimately we all want to get good value for the money we put into a purchase. Value for money when buying a car doesn’t just involve the price you pay when you buy it though – more often than not we need to consider the value we’ll get from re-selling it in the future.

Depreciation is one of the biggest factors to be assessed when making this decision, but it can frequently be overlooked in favour of style and desirability at the time.

Most cars depreciate at a rate of around 20% per year over the first three years of ownership, but there are a number of things to take into consideration which could help you retain as much value as possible thereafter.

The Key Factors:

The general reliability of your car is crucial in reducing depreciation – certain manufacturers have a reputation for unreliability so a bit of brand research is a must. The less you have to spend after services and MOTs, the better it is at the time and in the long run. In terms of MOTs and services, it is key to maintain a full service history to illustrate reliability as well.

Fuel type and MPG can have a significant impact on depreciation. Typically, diesel cars are more economical but the gap is closing as petrol engine efficiency improves, so newer petrol models should maintain value well. Looking ahead, hybrid and alternative energy vehicles will be a good option as, due to increasing demand, value will be more solidified. In addition to economy, overall mileage has a huge effect on value as the higher the mileage, the lower the value.

By-and-large, the bigger the car the higher the running and maintenance costs will be, so the resale value for superminis and hatchbacks is usually very good. Buying a car with lower running costs, including fuel, will in turn lead to a lower road tax which is highly desirable in a second-hand car.

A car’s value also affects insurance – for a lower value car an owner could consider third party or third party fire and theft policies to reduce their premiums. Insurers also study information on estimated cost of repairs and potential repair time, so reliability and depreciation has a major bearing on the overall cost of insurance.

The original cost of the car is worth bearing in mind, as if you take into account 20% depreciation per year during the first three years, a car worth £60,000 will depreciate by £12,000 per year as opposed to a £20,000 car retaining far more of its value by losing £4,000 per year.

Minimising Depreciation / Maximising Value

  • Maintenance – taking good care of your car on and off the read is key. Damaged bodywork and interiors will decrease value, as will worn out engines that have been aggressively driven. Buying a Haynes manual for your car is a great way of helping to reduce running costs too.
  • Don’t buy brand new – buying a ‘nearly-new’ or a five-year-old car will help you avoid the stage where the most depreciation occurs. Buying an eight to ten-year-old car is also an option, as this won’t depreciate any more than it already has, but this needs to be weighed up against potentially higher repair costs.
  • Don’t modify, choose extras wisely – ‘boy racer’ modifications such as spoilers, noisy split exhausts and flared wheel arches tend not to be desirable in the second-hand car market. However, options such as sat-nav, leather seats and air con are highly desirable and will be valuable additions.
  • Consider GAP insurance – because your car starts losing value the moment you drive off the forecourt, a GAP insurance policy is worth investing in if you’re paying for the car on finance. So, if you’ve bought a relatively new car and anything unforeseen happens to it the GAP insurance will cover the value lost by depreciation.
  • Leasing – this can be a good option in terms of keeping the running costs and repairs down, as they are generally included in your fixed monthly payments. Particularly useful for those that will have high mileage, but keep an eye out for mileage limits in the contract as they can be very costly.

Depreciation is something we all have to tackle if we’re buying a car, but hopefully with these tips you can make the most out of what is for many people, not just a means of getting around, but a great way of having fun and extension of their personality.