Most car or vehicle owners may not know about GAP insurance unless they have already experienced an accident. Then they would sadly ask why no one ever told them about it earlier.
For those who are still clueless about GAP, it is an insurance policy on your auto or car loan that takes into effect when the amount you owe on your car is bigger than the money your insurance provider will pay you. Unfortunately, most car dealers do not offer GAP insurance to be included in your sales agreement because they want you to pay for the entire amount of the car or vehicle. If you do not have GAP, you are in trouble of being in an upside-down situation where you are left to pay for a car you do not own anymore. Here are some things you should know when buying a brand new car:
- Ask the sales representative or loan officer if your current loan or purchase price includes GAP insurance.
- Be sure to apply for GAP if you are financing or leasing at least 70% of the actual price of your car.
- Insurance companies only pay for “market price” of your car after being totaled in an accident. If you feel you are only made to believe that you are protected, then getting GAP will surely help you.
It is never too late to get GAP insurance, however, the longer time you apply for it after initially purchasing your car or starting your car loan, the fewer reasons of having this kind of insurance. The moment you take a newly-bought car out of the car dealer, its market price automatically goes down by 20%. If a car gets into an accident only a few days later, it might turn out to be a good deal for you since its price would still remain fairly high. However, if it gets involved in an accident few weeks after your car purchase, its price has become lower than the amount of money you still owe on it.
This is where you need GAP. However, if the accident happened months after the purchase, market price of the vehicle would be more or less same as the amount you are left to pay on it. In this case, GAP is not needed anymore.
Surely nothing is more rewarding than to have peace of mind no matter what circumstances you encounter. Good thing there is GAP. It may only cost a few dollars, but its support is definitely worth having.