Just Joined, GAP insurance issue

[lozzmc]

Hello, Just joined with the intention of gaining some advice regarding a situation I have found myself in today.

When I purchased a motor vehicle back in 2015 on a PCP I was offered GAP insurance, I politely refused, the sales person then said, the car company were giving me GAP insurance free, great I thought that I don't mind.

However, what happened as and I can't remember if I can recall this being explained, the sales person discounted the vehicle by the cost of the GAP, then added the GAP to the finance package.

I was informed by the dealer that after a certain point I could return the car and so long as the vehicle wasn't damaged or within the agreed mileage there would be nothing outstanding to pay.

So 30 months into my 4 year PCP contract I call the finance company and informed them I wished to end the PCP and return my vehicle.

They then said, no problem because I'm so far into the contract there is nothing to pay on the vehicle, however I have £460 of value added products to pay off, cosmetic insurance which I did purchase and the GAP.

I have no issue (I don't think) with the finance company, they did lend the money for the GAP and the cosmetic insurance and they paid them on my behalf, however my nievety and the way the PCP was sold to me by the dealership means I wasn't expecting to pay anything after returning the car after 30 months. As the dealer said I could just return the car with nothing to pay.

My issue is the way I was sold the GAP insurance by the dealer, what are your views?

Thanks in advance.

[R0b]

Generally with hire purchase agreements, the GAP insurance is front loaded onto the finance package as has been done here from what you describe. For the purposes of hire-purchase agreements, the Consumer Credit Act does not differentiate between credit for the vehicle and credit for value added products or any other credit front loaded onto the the total purchase price.

So, for example, the dealer could add credit for the vehicle, the GAP insurance and even credit for any optional extras whether thats a sat-nav, car mats, alloys etc. but it doesn't matter, for all intents and purposes, it is deemed to form part of the total price payable under the hire purchase agreement.

Section 99 does say that you are only liable for one half of the total price payable so in my view, GAP insurance is not recoverable by the finance company (because the definition of total price excludes the recovery of monies for breach of contract, compensation or other damages beyond the 50%).

Now if the insurance is in your name, you could in theory cancel it and get a pro-rata refund but thats up to you but it still doesn't detract from the fact that the GAP has been incorporated into the total price payable and cannot be recovered.

Sometimes you might see in the agreement that the GAP insurance is a separate agreement and is recoverable but unless you have signed a separate agreement outside of the hire-purchase agreement, it still falls outside of the 50% amount that is recoverable.