If you want to buy a Mini these days, one of the most-popular ways of paying for it is to take out car finance and spread the cost over a number of years. This makes it extremely easy to get your hands on a brand new or used Mini without having to spend months or even years saving up the cash to buy one!
As part of the deal, motorists that buy Minis on finance are required to insure their vehicles with a fully-comprehensive insurance policy. This will ensure that, in the event of a car accident, your Mini will either be repaired or replaced; although if the latter occurs, you will normally just get the equivalent cash value.
After reading all that, you might be thinking to yourself that the process of owning and insuring a Mini is pretty straightforward and that if you ever have an accident in your Mini, your insurance company will cover you.
However, there is one problem with buying a Mini on finance that, unfortunately, catches a lot of motorists out! If your Mini is written off by your insurance company and you agree on a value with them, that value will often be much lower than the finance outstanding on the car!
To add further misery to your situation, the finance company will demand that you pay that difference to them as well as the insurance money in order to end the finance agreement! Obviously if the gap between what the insurance company pays you and how much you still have to pay on your finance is big, you could find yourself in a sticky situation.
The solution: GAP insurance?
In a nutshell, GAP insurance (Guaranteed Asset Protection) is a financial insurance product that you can take out whenever you buy a new or used car on finance.
Because your Mini’s finance company won’t write off any of the outstanding balance should your pride and joy get written off, this insurance product is designed to cover the difference.
This will essentially leave you with total peace of mind knowing that you won’t have any nasty surprises in store should your Mini be declared a total loss by your insurance company.
Is GAP insurance mandatory?
Absolutely not. You are free to decide whether to take out a GAP insurance policy or not, and in the event that you did wish to do so; you can choose your insurance provider just like how you can choose your general car insurance provider.
GAP insurance is a convenient policy that millions of motorists take out each year, and, in comparison to the cost of paying any financial difference, is significantly cheaper!
According to the sales manager at www.coopermini.co.uk, some people prefer to simply save up a cash nest egg to cover any problems like this, as it means that they do not have to take out any separate insurance policies.
Of course, if you aren’t able to save thousands up for this sole purpose, taking out a GAP insurance policy is a more-convenient (and affordable) option.