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Negative Equity GAP Insurance
Negative Equity
Imagine you bought a car for £25,000 with a finance deal. After a couple of years, you still owe £20,000 on your loan, but your car’s market value has dropped to £15,000. Unfortunately, the car becomes a total loss. Your standard insurance will only pay out the current market value of £15,000, leaving you with a £5,000 shortfall on your loan.
Negative Equity GAP insurance covers the difference between the insurance pay out and the remaining amount you owe on your car loan, including any negative equity. In our example, this insurance would pay the extra £5,000 needed to clear your loan, so you’re not left with any outstanding debt for a car you no longer have.
It’s particularly useful for those who have financed their car and are at risk of owing more than the car is worth. This cover clears the slate, so you're not burdened with negative equity.
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