by dkara » Wed Mar 31, 2010 03:43 pm
I am going to buy my first car tomorrow. Someone suggested that I should get Gap insurance when I buy the car. What is Gap insurance? And why would I need that if I get full coverage on my auto insurance?
Posted: Wed Mar 31, 2010 03:44 pm Post Subject:
When insuring your car on an auto insurance policy, most companies only insure the car for Actual Cash Value. Actual Cash Value is determined by subtracting depreciation from what the car cost new. In many cases, a person may owe more money on their car then what the Actual Cash Value is, especially considering autos depreciate in value so quickly. Therefore, if the auto owner totals their car, they end up owing the bank money on a car they can no longer drive.
GAP Insurance was designed to cover the balance due to the bank after the auto insurance policy pays. In many cases, the auto dealer will try to sell you GAP insurance and include it on your car note. This is convenient, but you will find it can be quite costly, plus you end up paying interest on the GAP insurance. I recommend that you call your insurance agent as in most cases, your insurance agent can offer GAP coverage for a much better price and you won’t have to pay interest on the premiums.
Posted: Mon Apr 12, 2010 04:58 pm Post Subject:
I believe that GAP coverage is also available for leased vehicles. In the case that the car is totaled and the insured still owes money on the lease the GAP coverage will pay the amount owed.
Posted: Mon Apr 12, 2010 06:21 pm Post Subject:
I believe that GAP coverage is also available for leased vehicles. In the case that the car is totaled and the insured still owes money on the lease the GAP coverage will pay the amount owed.
Works the same way as loan coverage.
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