WHAT IS GAP INSURANCE AND WANT TO BUY IT

What Is Gap Insurance And want to buy it !

What Is Gap Insurance And want to Buy It?

Today we’re going to talk about gap insurance and this is pretty simple there’s kind of a loss for thoughts of what the actual meaning of it is my thought is general asset protection.

Although a lot of people call it general auto protection because typically you only buy gap insurance when you’re buying a vehicle so what that does is gap insurance is basically the difference between the loan amount and what the car is worth.

So when you purchase insurance from anywhere whether it’s who you’re with now or if you’re shopping around basically what they do is they insure from what’s called actual cash value.

Gap insurance is basically the amount that you purchased the car for let’s say you bought it for $10,000 you drove it home tomorrow that car is probably worth 9,000 buying a brand new car off the lot is going to depreciate in value pretty quickly in car insurance.

It typically doesn’t insure the full value of the car or the loan because it’s only ensuring what the car is worth at the time of the accident.

So if gap insurance is filling that gap so if you spent ten thousand dollars you owe nine thousand but the car is only worth eight thousand you have a thousand dollar gap in between there. What your car is worth in what you owe so if you total your car is paid off it goes to the loan pays the check you’re done eight thousand dollars there you go but you still have a thousand dollar loan you’re still stuck with no car.

A thousand dollars to be like well what do I do now you owe that thousand dollars that’s where you can pick up.

What’s called gap insurance and now they’ll pay the difference same scenario let’s just go a little bit higher end so forty thousand dollar vehicle if your car was worth thirty thousand at the time of the accident but you owe forty there’s a ten thousand dollar gap.

So you’re going to have that insurance that you purchased ahead of time or in your auto insurance it’s optional both ways is you’ll have that extra ten thousand dollars worth of coverage.

It’s just going to pay off the loan you’re free and clear you’re not in debt because of it so you’re good where this comes into play.

If you’re going to have down payment or less than a 20% down payment that’s where it’s typically recommended because if you’re going to have a loan and you’re gonna drive off that lot and you’re underwater on that loan.

If something happens you’re stuck should you buy insurance versus buying it at the dealership I’ve got mixed feelings on that now I personally tell people to buy it at the dealership only because of an experience I had which was really good?

I had purchased a vehicle and it was like a fifteen thousand dollar vehicle a few years back and I bought gap insurance with it and it was pretty expensive.

I mean it’s anywhere from five hundred I think it was even a thousand dollars when I purchased it but what it was, it was optional so what I mean by optional is I could cancel at any time and get the remainder of my money back.

It was on a set timeframe what that meant was if my car was worth $14,000 when I bought it but I drive it off the lot and it’s worth 13.

I’ve got that extra gap right but eventually, the value of your car will meet the replacement cost of your car or the insurance value.

So if your car is flat even in you owe 8,000 and you have an $8,000 loan you’re not underwater.

So you’re wasting money with the gap insurance well the one I bought at the time you could refund it so the moment I hit that crossing point where my car was worth as much as it was actually I owed on it.

Then I got money back I think it got like four or five hundred dollars back from the gap insurance and that was my experience with it can you purchase it in auto insurance.

Absolutely you’ll do a monthly payment, not all companies do that so you have to check with your agent hope this article helps you.

Thanks