Auto GAP insurance covers the gap, or difference, that you would owe the bank if you are short the difference from what your car is worth and what you owe on it – if it was stolen or totaled out from an accident. GAP insurance protects you against a major financial loss on your vehicle and helps prevent a negative equity loan.
Follow this link to learn more about the 10 ways to avoid being upside down on your car loan.
There are four major reasons for considering buying auto GAP insurance on your next vehicle. The main reason for GAP insurance is that it provides you with peace of mind and protects you from having to come up with a large amount of money if your car is totaled or stolen. (Approximately 2.5 million vehicles are totaled annually with another 1.5 million vehicles stolen annually.)
4 – Reasons for having GAP insurance
If you answer yes to one or more of these reasons then you should consider buying GAP insurance on your next new car.
- Do you drive over 15,000miles per year?The more miles you drive per year the faster your vehicle depreciates. With the faster depreciation you are more likely to have negative equity in the event of a loss.
- Are you financing for over 48 months? When financing for longer periods of time, cars depreciate faster than what you can pay them off. Leaving you with a negative equity balance.
- Are you rolling negative equity into your new loan?This negative equity plus the depreciation of the vehicle you just bought, can leave you with a larger negative equity situation.
- Are you putting little or nothing down?When you finance with nothing down you are also adding additional cost like, taxes, title and other fees to your loan. Depending on the cost of your vehicle, this amount can be a couple thousand dollars. This additional cost plus the depreciation could leave you with a large negative equity car loan.
Auto GAP insurance coverage is very affordable and shouldn’t cost you that much to buy. It is inexpensive for the peace of mind you get. Learn more about what you should pay for GAP insurance.
If you have any questions about GAP insurance or any phase of the car buying process please feel free to contact me. I’ll get back to you soon.
