Do You Need Gap Insurance On A New Car
If you plan to lease see car leasing.
Do you need gap insurance on a new car. Because depreciation is most severe during those first. Insurers don t pay off your loan but they do consider condition mileage features and local sales information to determine actual cash value. You ll usually need to buy gap insurance within three years of buying a new car at a minimum.
If you ve purchased a car at a dealer before you ve probably been offered gap insurance an acronym for guaranteed asset protection insurance. Your car is. For information about getting a good deal on a new car see buying a new car and trading in your old one.
This insurance is usually offered to you in a dealership s finance office when you re buying a car and it s designed to add on to the insurance coverage you already have. Before you can weigh the value of a gap insurance policy you ll need to learn how the insurer will value the car in question. To avoid the need for gap coverage make car buying and financing choices that put you right side up rather than upside down from the start.
Suppose you bought a 30 000 car and two years later it s stolen and never recovered. In the event your car is stolen or written off total loss gap insurance covers the difference between the current value of the car the amount your car insurer will usually pay out and the amount you paid for the car in the first place or any outstanding payments. When you re initiating a car loan or lease ask your insurance agent loan officer or dealership finance and insurance manager about gap insurance.
If you made a low down payment if you bought a car that depreciates rapidly if you have a high interest rate or if you rolled over other costs into your new car payments such as money you still owed on a car you traded in gap insurance makes sense. Essentially you do not need gap insurance if you are certain that your loan to value amount will not leave you with an upside down car loan in the event of a total loss. For buyers gap insurance only makes sense if you expect to be upside down on the car a situation in which you owe more than it is worth.
Gap insurance coverage helps indemnify your family in case of a total loss. If you are a single car family you probably cannot afford to be without a car for any period of time. Guaranteed asset protection or gap insurance is a financial product often sold when you buy a brand new car.
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