Normally, when a vehicle is stolen or written off, the owner can only recover the vehicle's current market value from general car insurance. But VRI protects the invoice price of the vehicle, allowing a like for like model purchase. Dealers calculate the VRI premium, payable in a lump sum or in monthly instalments.
Under the scheme, a driver pays 3.5 per cent of the invoice price of the car over a 10-month period at 0 per cent interest, as well as a 0.7 per cent deposit. On a £10,000 car, a driver would pay a £70 deposit, which would also be the dealer's commission, and 10 monthly payments of £28 until the £350 total has been paid.
Dealers will be able to increase customer satisfaction and loyalty with VRI, says Miles Roberts, director of sales and marketing for Singer & Friedlander Finance. “For the dealer, this added value service is likely to encourage the customer to return there for their next vehicle,” he says. “As well as earning an additional profit margin from cash buyers, VRI provides dealers with integrity and customer retention.”
Roberts says dealers can already target motor finance buyers with a myriad of products, such as GAP or credit insurance. But those customers only account for 30 per cent of the car buying market.
“Our VRI product gives automotive retailers the opportunity to capitalise on the remaining 70 per cent of buyers who pay cash and have only been offered warranty protection,” he says.