ACCORDING to YouGov research published last year, one in ten motorists in the UK – an estimated 6,350,000 people, had experienced their car being written off or stolen in the previous five years.
Only 17% could replace their car on a like-for-like basis using their comprehensive insurance payout alone. The financial exposure for customers using Personal Leasing risks is particularly pronounced because of the early termination terms and conditions associated with the product.
Personal Leasing/PCH continues to gain traction, particularly in the new and nearly new markets. For suppliers, the appeal of optimising the lifetime value of people by promoting leasing is clear. Monthly payments can be lower than for a comparable PCP agreement, and unlike PCP or HP, leasing products have a built-in end date that can be expensive to end early. Any early termination typically means paying up all or most of the outstanding monthly payments. Good for enhancing retention and customer lifetime value, a write-off risks leaving customers exposed and the suppliers at risk of losing that customer.
Depreciation which means that a customer’s car is losing more of its value in the early years of a lease, combined with the high cost of early termination, means that when it comes to GAP cover, a product built specifically for Leasing is the right solution to help customers.
Leasing brokers have been quick to pick up on the Lease GAP opportunity offered by AutoProtect Group, which uniquely also includes cover for advance payments for a new Personal Lease agreement on a replacement vehicle. James Barr, AutoProtect Group’s Corporate Business Development Director is keen to encourage dealers to get on board.
He said: “Lease GAP is not universally available, but it is one that all businesses providing personal leasing/PCH should have available. Using a standard GAP policy, even if well intended, could leave the customer exposed and with good outcomes featuring high on the agenda, in light of the forthcoming Consumer Duty changes, having the right tool for the job is easily arranged.”
“GAP products are not all the same. Dealers and their customers need to be aware that the distinctive nature of Personal Leasing, notably the cost of early termination that would arise in the event of a total write-off, means that offering a dedicated Lease GAP product is the right way to go in ensuring a good customer outcome should the policy be required.”
