Auto GAP Coverage – Should You Buy Auto GAP Coverage and Where Should You Buy It?
Odds are when you purchased your new vehicle, the dealership offered you, along with extended warranties and other extras, gap insurance or “guaranteed asset protection” to protect you from your cars value depreciating lower than your loan balance. It may be good idea to purchase it if you don’t make a big down payment.
It is not uncommon for a vehicle to depreciate by 40% the first two years of ownership and most of that is in the first months of ownership. If your vehicle cost you $40,000 and a few months later you have an accident and it is totaled. For ease of illustration – let’s say your vehicle fair market value is now $30,000 and you owe $38,000. You will be on the hook for $8,000. The loan company will want their money. It’s the old paying for a dead horse scenario.
If you leased a vehicle it was most likely required or factored into the lease. It was added in to protect their asset.
Here are the big tips: If you don’t put down a large down payment and/or you don’t want to take the risk of loosing the difference between loan value and market value – you should purchase it.
If you decide GAP insurance is a good idea – get it from your current auto insurance agent. It will most likely be significantly less.
The dealership’s finance person will most likely put the hard sell on you and tell you want it you must purchase right then and there or not at all. They don’t want you contacting your agent, getting advice, and comparing.
If you are a savvy consumer you should tell the finance person thanks, but no thanks. Your insurance agent can add it to your policy – probably for less than half – and if you want to drop it after two or three years you can take it off your policy. It would be best to call your agent before hand just to make sure your company offers it. There are, although not many, a few companies that do not offer it.
Many people have been purchasing GAP insurance from the dealer at the time of purchase. It can be an emotional and exciting time. Hey – you are getting a new vehicle and it can be fun. However, it is easy to get duped into buying the insurance and paying double to protect your new asset. Call your agent.
This article was written to inform and save you some money. Step back – take a few minutes and do the math. You will be quite surprised how much you will save. It will probably be around two vehicle payments.
Tim Peddycoart is an independent agent in Minneapolis, Minnesota who helps people lower their insurance costs, get better coverage, and shows them how to receive hassle free low cost insurance for life. http://www.istmn.com
Article Source: http://EzineArticles.com/?expert=Tim_Peddycoart
Related Information
Best Ways To Save Money On Your Auto Ins
1. Drive Less for and get a discount
Some carriers will discount your premium with a low-mileage discount if you drive less than 7,500 miles per year. Also ask your agent if you can receive a commuter discount for using public transportation.
Get the answers you need.
Bodily Injury Coverage:
Bodily Injury Coverage covers the cost of injury or death that you are responsible for. This coverage does not include your car, you or other people on your policy.