I am buying a car on Citroen's Elect 3 scheme.

The invoice price is something like £19k, but the total payable over the 3 years is something like £21k (including the interest and the final payment).

My understanding of the BTI Gap insurance is that it covers the difference between the car's insurance value at the time of "total loss" and the original purchase price as defined by the invoice (ie £19k).

The terms of the finance agreement, again if I understand them correctly, require me to :-

"pay the rest of the total amount payable under the agreement less a rebate for payment required by law"

and

"pay a sum equal to the estimated value of the vehicle at the end of the period of hire"

So it would appear that in the event of a total loss there is still a gap of £2000 that is uninsurable? Or am i getting this totally wrong.

Interesting that I've had to request the terms and conditions of the finance agreement - dealer trying to say you can read them when you collect vehicle. Sharp practice?

At the moment i'm tempted to cancel the entire order. Can anyone advise whether the above is normal, and anything to worry about?

There are a couple of types of GAP insurance. RTI (return to invoice) and, the one you require, Finance GAP which pays the difference between the Insurer's settlement and the amount of the finance settlement - leaving you debt free.

Note - There are GAP policies available which are a combined GAP. Paying you back to invoice or finance settlement - whichever is the greater.

JJ

Hi Mitch

In my opinion you've nothing to worry about.

To cover your points one by one. "pay the rest of the total amount payable under the agreement less a rebate for payment required by law"

Whilsts this goes under the name of Elect 3 and is called a PCP it is actually a regulated hire purchase agreement. This means to settle the agreement because of total loss or if you simply want to pay it off, you have to pay all outstanding payments. This includes the final payment. Citroen by law as all finance companies have to, will calculate interest to the date you settle. Therefore you in effect receive a discount off the original total amount payable.

"pay a sum equal to the estimated value of the vehicle at the end of the period of hire"

This is referring to the final payment as I mentioned above. (I believe Citroen also call it a guaranteed future value) If you imagine you are buying the car over 5 years but at 3 years you have to pay the last 2 years payments in one go.

Now as far as the GAP cover is concerned you are getting it a little wrong. You paid £19k for the car ie invoice value. In the event of a total loss you will receive £19k in two payments. One from your insurer and the other making it up to £19k from the GAP policy. You mentioned however the retail price was £21k. If you receive no discount second time around you will indeed be £2k short. To cover this you should purchase Vehicle Replacement GAP not Back to Invoice. Citroen may offer this but check it is what it says Peugeot (sister company) call it Vehicle Replacement but in fact it is Back to invoice.

If all else fails on the gap side get a quote online. I'm sure there are many good ones out there but the one I've used is www.ala.co.uk and I personally found them very good.

Hope this helps.