Data analysis by Intelligent Motoring has revealed a 24% rise in the value of Guaranteed Asset Protection (GAP) insurance claims from January to September 2022.
As the cost-of-living crisis tightens Intelligent Motoring, parent company of MotorEasy is urging retailers, finance houses and motor related organisations to reduce the financial exposure of customers, through the addition of fair value GAP insurance to their aftersales proposition.
Duncan McClure Fisher, chief executive of Intelligent Motoring, said: “Although used car prices are currently at an all-time high, the SMMT has reported a second consecutive quarterly decline in used car sales.
“Whilst this is in part due to used car stock shortages, the cost-of-living crisis is believed to be taking its toll on big-ticket purchases, which is likely to reverse the upward trend seen in used car residual values.
“This could leave hundreds of thousands of consumers who bought a used car at a peak price, finding themselves caught in a negative equity trap, if they write-off their vehicle before their fixed-term finance agreement comes to an end.
“Those in the automotive industry recognising the importance of providing affordable protection for their customers are also building greater customer loyalty and retention for the future.”
Almost a third of British consumers (32%) are planning to hold on to their current vehicle for longer than planned due to the cost-of-living crisis, new research by Close Brothers Motor Finance has revealed.
Meanwhile, owners of cars that are at least 10 years old are also less likely to swap them for newer models during the crisis, according to a Motorpoint survey.