November 20, 2014

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Add-on Products

 

Finance
Now more competitive rates for the consumer but a great money spinner for the dealer especially when you consider that most dealer groups are on a fat volume bonus “kick back” from their proffered finance house.

GAP insurance
Very cheap for the dealer to buy, easy to sell as it is actually a good product but the mark up can be extortionate.

The whole concept of GAP insurance is that it makes up any shortfall between the replacement value or outstanding finance and the amount offered by an insurer. It came about because of the horror stories surrounding people owing thousands of pounds to finance companies for cars that were written off.

Of course there are different varieties of GAP insurance; principally “Finance GAP” will insure against the shortfall between an insurance company payout offer and the outstanding finance on a vehicle (taking care of negative equity). Replacement GAP which covers the cost of replacing the car with exactly the same make/model or equivalent that was originally purchased and Return To Invoice GAP

(RTI) which pays the difference between the car insurance claim settlement amount and the amount that was originally paid for the car i.e. the invoice amount. (Return to value GAP or RTV is the same but is for vehicles aged older than 3 months).

The following illustrations may be useful:

Finance GAP insurance
• Car purchase price – £20,000
• Car deposit – £3,000
• Car finance – £17,000
• Car insurance settlement amount – £13,500
• Amount of finance outstanding – £16,000
• Shortfall paid by the GAP insurance – £2,500

Replacement GAP insurance
• Cost of car – £20,000
• Car insurance settlement amount – £13,800
• Cost of replacement car – £21,000
• Additional cost paid by the GAP insurance (directly to car dealer) – £7,200.

Return to Invoice GAP insurance – RTI Gap insurance
• Invoice amount, amount paid for the car – £20,000
• Car insurance settlement amount – £14,200
• Shortfall paid by the GAP insurance – £5,800

PPP (payment protection)
Again in these days of faltering confidence with job security payment protection is becoming easier to sell but again very expensive.

Paintwork protection
Products marketed with glossy DVDs about that back to the showroom look a special rubberoid compound that protects your paintwork from the elements and road debris to keep that all year round sheen and help with better re-sale, again slick marketing not a bad product but a dealer can purchase and apply this system for around £60 but have been known to charge up to £600 to apply on certain models, the list goes on.

MOT cover
Will cover you against the unexpected costs of any necessary repair or replacement of specified components.

Extended warranties
All new cars sold in the UK include a basic warranty, called the manufacturer’s warranty.
These usually last for one, two or three years and now in the case of Kia 7 years.
Most manufacturers that offer only a one or two year basic warranty also offer, at no extra charge, a dealer based extended warranty. This can extend the total period of cover to three years, or longer. It is also possible to buy other types of extended warranty once you have bought your car.
But beware – the dealer-based warranty and warranties you can buy can have more limitations, such as mileage for example.

Tyre insurance
Covers all your tyres from punctures, accidental or malicious damage.

Key insurance
Key Protection is designed to reduce the distress and worry of losing your keys, as well as the expense.

Misfuelling protection
Yes, as the name suggests, you are now able to protect yourself from the cost of repairs should you put petrol in your diesel or vice versa.