Car Leasing.

[Hopkirk]

Hypothetical question.

You lease a car for four years, and are obliged to return it at the end. After two years it is written off in an accident. Your insurance company agrees to pay out what they consider it is worth.

What happens now?

[Mamyalynne]

Info here

https://www.leasefetcher.co.uk/guides/car-leasing-explained/write-off-lease-car

[ladybirder]

Oh gawd have I got to read it mamya to find the answer. Humph. ;-)

[Mamyalynne]

Yes :-)

[Hopkirk]

I've tried reading it, but don't feel I know the answer from that.

I get that you need gap insurance to cover the difference between the insurance company's payout and the leasing company's valuation.

However I'm not sure if the leasing company will still insist you keep paying out for the two years remaining on the contract. You would be stuffed if they did.

[THECORBYLOON]

As I understand it, the finance company would include the money they would have received from the lease agreement in the amount to be paid and the GAP insurance would also cover that.

[Mamyalynne]

Sorry if it wasn't comprehensive enough, probably an ideal question to ask at the start of any lease agreement - before you sign.

[Hopkirk]

I'm not about to lease a car.

A sort of pastime for me is to research and choose my next car.
Once I have decided, I discard the whole idea and start again.

My current planning (which won't happen) is to switch to an electric car. Normally I buy my cars outright. However electric cars are so expensive, that in my dreams I lease one.

[Hopkirk]

I know when you buy a car they try and sell you gap insurance. No doubt it is the same when you lease.
I'm always suspicious when someone tries to sell you an extra, because they are probably making a packet. I guess if you shop around you can get cheaper gap insurance. Does anyone know?

[THECORBYLOON]

There's info here from Which? and it states dealers are not allowed to offer GAP insurance on the same day as the sale. There must be at least a two-day gap unless the buyer waives their rights.

https://www.which.co.uk/money/insurance/car-insurance/gap-insurance-explained-aspmb4u9mhvz#headline_5

[Hopkirk]

Useful.

Thanks TCL.

[barry1010]

The leasing company does not insist you continue paying every month until the end of the contract as you have to pay the shortfall between the insurance payout and your contract in full.
If you are not insured for the shortfall and can't afford to pay the lump sum then the lease company will accept a monthly repayment schedule but that will be a whole new contract and not a continuation of the original lease contract. The amount to be paid each month could be more or less depending on the amount of the insurance payout and the length of time they give you to pay.

[Hopkirk]

Thanks Barry