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Original poster

PCP car gone very wrong - have I got any redress?

25 replies

wonderstuff · 25/10/2017 23:05

I bought a car on pcp in July last year, I payed £2K deposit, plus my old car which was valued at £1200 and obviously paid monthly instalments. I turned down GAP insurance.

In August my car was written off, I was entirely free of fault, car went into the back of me and driver accepted full liability.

Nearly a month later the insurance company decided that my car is a write off. Problem is that it is now worth less than the finance I have in place and I'm not only left £1300 down but also because the car is actually being leased to me at this stage I'm also down a car.

The assessor who called to break the bad news informed me that had my accident happened a month earlier, so within 12 months of purchase I'd have a replacement new car. Which just adds to how gutting the situation is.

So here's the thing obviously I should have taken out the GAP insurance and I'm under insured, but I honestly didn't realise that, given the nature of the contract I'd be left in this position.

I have bought a car (thank god for savings) and was offered the same GAP insurance on this car, a £4500 second-hand vehicle bought for cash as I was for my pcp new £18K car - and the same cost! It feels dodgy. I presume that if I wrote of a lease car I wouldn't have financial liability, and if I wrote of a financed purchase I could use the insurance money to buy like-for-like - but I'm in the position now of being down a car and having to pay it off - despite fully comp insurance and being not at fault I'm screwed.

Is there anything I can do? Can I claim I've been missold the pcp or is the insurance an issue here? There must be lots of other people who are in a similar position.

OP posts:

19lottie82 · 25/10/2017 23:38

I'm no expert OP, but situations like this is what gap insurance is for.......sorry!

Original poster

wonderstuff · 25/10/2017 23:57

Helpful. I was of the belief fully comp insurance would get me back to a pre-crash position.

OP posts:

somewhereovertherain · 26/10/2017 07:43

Nope fully comp would only ever get you the market value of the car at the point of the crash. It’s a bugger and I doubt you’ll be able to have any redress on the pcp front.

AccrualIntentions · 26/10/2017 07:47

I suppose you could try to argue they didn't adequately explain the importance of the GAP insurance when you were sold the car, but I'd be amazed because in my experience this is one of the things that's really heavily pushed at the point of sale, and for good reason.

MaximumVolume · 26/10/2017 07:51

I agree with Lottie: in a PCP situation you are driving away a new car so part of the cost (and repayments) includes things like VAT and the premium of having a brand new car.

If the car was yours outright then the insurance in theory should pay for a like-for-like replacement of the crashed car, so a 13 month old car with 15k on the clock.

They offered you gap insurance which is an extra payment to ensure you aren't in this situation, so I can't see that you were missold anything.

It is gutting, though. I'm really sorry you have learnt the hard way.

LIZS · 26/10/2017 07:54

Shouldn't the insurance pay out reflect the actual value of the car at the point it was written off. Can you get the early redemption penalty from the pcp company, as you presumably have already funded some of the depreciation.

Gizlotsmum · 26/10/2017 08:04

I think unfortunately as you chose not to take the gap insurance ( so they mentioned it to you and would have had to explain that what the risk was) you haven’t been missold anything. It’s absolutely gutting for you, but I don’t think you could claim miss selling of anything

Gizlotsmum · 26/10/2017 08:05

@liz I think, dependant on the duration, that it takes a while before the remaining finance is less than the value of the car, especially on brand new ones as they lose value as soon as they leave the forecourt

AccrualIntentions · 26/10/2017 08:08

Shouldn't the insurance pay out reflect the actual value of the car at the point it was written off.

It does. The point is that on a pcp arrangement the finance owed at that point is more than the value of the car because of the way depreciation works.

SpadesOfGlory · 26/10/2017 09:29

Sorry youve been left in this position OP.

As PPs have already said, car insurance will only pay the current market value of your car if you have an accident. This is true whether you buy the car outright or on finance.

My DH is in car sales and barely lets a customer leave without buying Gap if they're financing a car for this very reason - it "tops up" what your insurance company pays out so you don't have a shortfall and end up in the exact position you are in. They push it really hard in any dealership I've ever been in, but usually will be able to jiggle the figures to offer you a discount on it. Most people will haggle for it.

If they offerred you Gap insurance and you declined it I don't think you will have any come back unfortunately, as it will be on the paperwork you signed that you didn't want it.

BumbleNova · 26/10/2017 09:32

This situation is exactly what GAP insurance does. I think you may have to chalk this up as a lesson learned.

greendale17 · 26/10/2017 09:33

“They offered you gap insurance which is an extra payment to ensure you aren't in this situation, so I can't see that you were missold anything”.

^This. You turned it down because you didn’t want to pay for GAP insurance

Original poster

wonderstuff · 26/10/2017 09:49

They didn’t push it heavily, and certainly no deal was offered, I didn’t get that I’d be left without car AND in debt. I was Uber the impression that I’d be in debt but able to replace the car. Expensive learning curve. Was speaking to a friend recently who’s done the same and thought the same as me. I really don’t understand how the same product at the same price is appropriate for my second hand hatch and ‘my’ new suv. Gutting.

OP posts:

GeorgeTheHamster · 26/10/2017 09:49

Sorry OP. This is what GAP insurance is for. You can only afford not to have GAP insurance if you can afford to buy a new car. As you could, arguably, so maybe it wasn't your worst decision.

Original poster

wonderstuff · 26/10/2017 09:52

What I mean is I thought I’d get the insurance pay out, replace like for like and keep paying the finance. But the money went straight to the finance company I didn’t realise that I didn’t have ownership.

OP posts:

LIZS · 26/10/2017 10:01

The basis of a pcp is that the car only becomes yours at the end if you make final payment otherwise you hand it back and walk away. It should be on your paperwork.

SpadesOfGlory · 26/10/2017 10:51

Did you get any paperwork OP? It will all be covered on that. Dealerships often make more money on Gap and paint protection than they do on the actual car. They won't offer you a deal unless you ask for it.

With PCP you get told the guaranteed value of your car at the end of the lease period, as that is what your monthly payments are based on. It's usually significantly less than what the car was at the start of your agreement and you would only break even about two thirds of the way through the agreement. So if you wrote off the car just over a year in then you owed more to the finance company than what the car was worth and are liable for the difference. Just the same as if you had a mortgage and then you sold when your house was in negative equity...you have to take the hot for the shortfall.

Unfortunately it's a live and learn type of situation

Original poster

wonderstuff · 26/10/2017 11:50

Only money I guess, and the car kept me and the kids safe in a pretty nasty shunt. I got very little paperwork, not much detail on it at all. I knew the dealer was making a good cut on the gap, felt like ppi.. could have been worse, but seems to be the absolute worst time to happen. Such a waste of money.

OP posts:

SpadesOfGlory · 26/10/2017 12:08

I know, it's a horrible thing to happen. In the balance of probabilities most people who do take Gap never have to use it, but the one time it happens to you it would be typical that you didn't take it.

In future, take Gap when offered but haggle down the price. It will be possible to get it for cheaper than they initially offer it. They never expect customers to take the first price given and that's why it's generally on the high side, it's to give some wiggle room.

Tbf until DH started working in the car trade and has learnt the realities of what it's like behind the scenes, I didn't have a clue about finance and GAP insurance either, just some salespeople will be better than others at explaining the implications.

BarbaraofSevillle · 27/10/2017 10:15

It's too late now but if you ever enter a PCP again, bear in mind that GAP insurance offered by the dealer is vastly overpriced and you can get it much cheaper elsewhere (as with just about everything financial, read up about it and look for recommendations on Moneysavingexpert).

I got a car on PCP and the dealership wanted about £500 for GAP insurance. I refushed to pay that and got it elsewhere for not much over £100.

DoubleAces · 30/10/2017 19:48

I got a 4 year GAP policy for my Mrs for under £80 (most discount brokers charge > £100 for only 3 years). Pays to shop around.

Sorry to hear about your misfortune. Definitely wise to get GAP on all car purchases even on second hand cars. It’s dirt cheap (less than £20/yr in our case)

Mantegnaria · 30/10/2017 23:21

Maybe the message is don't buy on PCP ?

All this complex financial stuff just for a car ..........

If you can't afford to buy outright, then you can't afford it.

Best get an older, cheaper car.

Migraleve · 30/10/2017 23:38

The moral of the story is, when you are happily signing bits of paper for and £18k shiny new car, you need to read the paperwork and find out exactly what you are getting in to.

Pebbles1989 · 31/10/2017 00:18

You didn’t realise you didn’t have ownership?! Jesus wept.

Mrsyorkie · 31/10/2017 18:47

Don't know if this is helpful at all... I have a car on pcp and have gone over my miles. I could part ex it if I want but would be down quite a bit of money because of the current value. What I plan to do instead is get a bank loan to clear the payment which means I'll own the car and the payments happen to be lower. I know in on your situation there is no car to be owned but this is an option if you're still paying for it and want to reduce the payment?

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