Is GAP Insurance Worth It?
September 27th, 2011 | Author: financereferences.com
Do you worry about the loss or total destruction of your new vehicle? What about the huge difference between your vehicle loan and the vehicle’s worth? Is GAP insurance worth it? Consider the pluses and minuses of insuring extra with GAP before signing the loan on that new truck.
GAP greatly increases the amount of coverage you have for your new auto, but it is relatively cheap. This type of insurance is extremely effective at protecting against the loss of or the total damage done to a vehicle you have just purchased. The older the vehicle is and the less you owe on it, the less effective that the GAP becomes.
For new automobile loans, it is almost certain that you should buy GAP. Because insuring your vehicle without GAP typically covers only up to the Blue Book value, and because a new vehicle loan is usually much more than the vehicle’s value, insuring in this way can be a great investment against the sudden loss of your shiny, new ride. When in doubt on a brand new car, buy GAP.
As you carefully read your new loan agreement, consider whether or not the GAP covers the deductible. If it does, then you have even more reasons to buy it. Consider carefully, because sometimes the deductible is not covered in the GAP policy.
GAP gives you loan flexibility. Having a higher deductible could help you to rearrange other terms in your loan. These include the amount of time you have to repay it and the payment amounts.
GAP also covers any trade-in vehicle’s current loan balance. Negative worth from the trade-in might be added to the new loan. It would be a double burden to still owe on two vehicles while having none. Remember that different items, like fees and taxes, can also be a part of that same loan.
When shouldn’t you buy it? If you already own or almost own your car, then you do not need to insure with GAP. If easy riding is ahead or you have a lot of trust that your vehicle will not be totally destroyed, perhaps because it almost always sits in the garage, then you may not need it. But GAP is usually very cheap in relationship to your loan payment, so it is usually worth buying for a new vehicle. Is GAP insurance worth it?
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Tags: automobile loans, blue book value, Brand New Car, gap insurance, H, vehicle loan