/ Money, Motoring, Shopping

Are the added extras at the car dealership worth it?

car finance

Whether you’re buying your car brand spanking new or second hand, you’ll likely suffer the hard sell on a plethora or extras. But could you be paying extra on those extras?

Perspective can be everything. If you were shopping for car insurance on a comparison website, a price difference of £477 might mark the difference between first and 30th place in your results. You probably wouldn’t even scroll that far down the screen.

But if you’re already laying out thousands (or tens of thousands) on a new dream car, and the salesperson proposes dropping in a neat bundle of additional insurance products, a margin of several hundred pounds can seem like small change for the convenience and quickly gained peace of mind. After all, by this point, the end is in sight after hours of researching, customising and negotiating in different dealerships – not to mention the test drive and deciding on your method of payment.

But the chances are that you could ‘mislay’ hundreds in overpriced dealership insurance.

Inertia selling

Dealerships bank on this kind of customer inertia to sell financial products that are likely to be worth a fraction of their price. When we sent undercover researchers to dealerships of six major carmakers, 19 out of the 24 garages visited were pushing insurance add-ons. Three years’ worth of minor damage insurance – covering cosmetic repairs for bumps and scrapes – was offered for £500 on a Volkswagen. We found comparable cover online for £269 on average.

The most expensive was ‘Gap’ insurance – bridging what your insurer pays you and what you paid for the car if it’s stolen or written off. Costing £619 at one Audi dealership, it was less than a quarter of the price (£152) online.

The most expensive insurance package we were offered – comprising Gap (£399), minor damage cover (£399), and tyre insurance (£250) – totalled £1,048 from a Honda dealership. We’d have knocked this down to £571 (saving £477) by going elsewhere for the extras.

Uncompetitive rates

After a study of the market, the Financial Conduct Authority concluded dealerships were selling Gap policies at uncompetitive rates and set out new rules on how they could be sold, in force since September last year. These changes compelled dealerships to build a four day period between recommending and completing the sale of Gap insurance – giving customers more of a chance to shop around and consider their choice.

So far, though, dealership Gap prices are still easily undercut by online rivals. We think it’s healthy to assume that most of the extras a dealer offers – from insurance to protection sprays for paintwork and interiors – are priced way above their actual value. So you’d be missing a trick to not, at the very least, challenge the dealer to reduce the first price they offer.

Have you paid over the odds for dealership extras, or had success in bargaining down the prices? Let us know.


The only extra I paid for when I bought a new car was gap insurance. After the salesman did the expected theatrical performance about going to ask his boss about price and I showed him an estimate that I had looked up online, resulting in a further price reduction to meet the estimated price. I

t’s a poor show when we have to buy extra insurance because standard car insurance does not provide the cover that we need.

I expect my car to last at least ten years and will probably buy online next time.

I have seen, Which? I think, that Gap insurance simply is not worth paying for based on the overall use made of it compared to its cost. However, for those being ultra cautious it might bring peace of mind. My dealer did not mention it when I bought.

Which? have given tips for buying new, including taking advantage of the manufacturer’s contribution if you take out finance with them. This is quite independent of any discount you arrange with the dealer and can be substantial. £5500 in my case. What Which? did not say (well. I didn’t see it if they did) is you may well get this same contribution by paying cash (either from your own resources or by getting a personal loan that may be cheaper than the manufacturers arrangement). In my case I was advised by the dealer to sign up for the loan and then cancel it within the 14 day “cooling off” period. Exactly what happened. I don’t know how general this is but each of the four dealers I spoke to gave the same advice. Incidentally, when you get a quote online from one of the “buying specialists” this contribution will probably be included in the “big discount” they can get for you, but it is based on taking the loan. In my case I got a bigger overall discount than online by negotiating directly with local dealers.

I avoid paying for extended warranties but in the case of a new car, it could have been expensive if it had been written off soon after purchase. He had refused to let me have a printed copy of the breakdown in costs of the car but let me take photographs of the figures and I provided evidence of other estimate for gap insurance. As you say, Which? has some useful advice.

What I think helped me was that I was not desperate to buy a new car. When I bought the previous one I had decided to keep it for about ten years and it would not be a problem if I kept it for another year.

It pays to research first and then not accept extras already eliminated from consideration. Our approach is to spell out exactly what we want and ask the dealers for their best price – no haggling, no telling the lowest offer to date. They then know that if they do not quote as requested they stand no chance of selling. We then go back to the dealer with the best price. Much less stressful for us, even if it puts dealers under pressure. We have done this for years, very successfully.
If intending to keep a car a long time, 10 years or more, the year code in the registration affects the residual value much less than condition, and buying in the sales lull before the year code change, when dealers are struggling to maintain sales momentum, can result in real bargains.

Troika, I agree. We spent quite a bit of time looking at the car model, engine, and “extras” to set out exactly the car we felt would suit us for the long term. Dealers were helpful in this process, as were family. We then approached 4 dealers and said we wanted their best price. 3 agreed and gave decent discounts, not too far from each other. One would not, but asked us to show us the lowest quote and “we are not usually beaten”. They were discarded. A final negotiation with the remaining three got what we thought was a decent price – I hope so because you never know how far you can go. About 25% off list. It beat on line quotes and we came away happy (well, as happy as you can be when parting with a substantial sum). I was pleased that the three contenders never put us under any pressure to close the deal there and then.

You are right about registration – why bother about this if you are going to keep the car? Anywhere, a new plate only lasts 6 months – soon gone.

Howard Lester says:
19 February 2016

we always buy at the end of the month do your negotiation with the dealers and go back to them at the end of the mouth you may get more off as they need to meet there quota has always worked for us

I’ve just bought a nearly-new car, with Gap insurance (which I’d never come across previously) from a main dealer, and on researching it further am stunned to discover that there are six ‘rules’ of selling this insurance (from the Which? website). The dealer failed 50% of them. I’ve asked them to remove the product from the order and reminded them of both the six rules and of the PPI mis-selling scandal.

Took out a 3yr Cosmetic Insurance to cover chip type damage of up to 18 claims in a 3 yr period.
First claim for a 3mm chip – has required four photographic submissions for an “assessment” and now have been advised of a date for attention , which will be nine weeks after submission of the claim.