 Gap Insurance: Spend A Little To Save A Lot
Posted by carsandtrucks on Monday, February 04 @ 08:04:24 PST
As today’s car and truck buyer is looking for a low monthly payment, without making a down payment, the buyer is often “upside down” soon after taking delivery. What this means is the buyer finds they owe more on the vehicle they financed then what the vehicle is worth. If that vehicle is involved in an accident where the cost to repair exceeds the value of the vehicle or the vehicle is stolen, you could be stuck
making up the difference between the value of the vehicle and what you owe. As an example, you buy a car or truck for $20,000 with no money down. You drive the vehicle 6 months making a low monthly payment. The vehicle is involved in an accident and the insurance company deems it a total loss. The insurance company values the vehicle at $16500, and you owe $18000. You are responsible to the lender for making up the $1500.00. If you purchased GAP insurance when you bought the car or truck the insurance would cover this shortfall. If you lease a vehicle GAP insurance is a no brainer. Although you do not own the vehicle you are responsible for it and its value. Total a lease vehicle and you will be stuck paying off a large amount of inequity. In fact many lease companies require GAP insurance. If you are buyer that puts down a substantial down payment and have a short term loan you should not need GAP insurance. GAP insurance can be purchased from most insurance companies and in some case you may have it included in your policy and not realize it. You can also buy GAP insurance from the dealer, but expect to pay more as they will be marking it up for additional profit to the dealership. I did call a couple of insurance companies and inquired about GAP insurance for a used vehicle and could not find one that offered this coverage on a used car. I was told there are some companies out there will cover used cars so if you think you need GAP insurance on your used car or truck, I would recommend you search on line.
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