Driving a brand new car can be really so exciting even if you have been driving for years now. Even if you are actually driving the car you still can’t help your self imagining images of you showing your co-workers, family and friends how nice you look inside a brand new vehicle. If you are in such euphoria the last thing that you will pre-occupy your mind with is the image of your car being involved in an accident. However you know that it can happen. When we talk about accident, no one is exempted.
Regardless of the manner on how you bought your car having it involved in an accident leaving it badly damaged moreover totaled is such a devastating experience. Now you have more problems if you bought your car through lease.
Suppose your car is two months old which costs $ 25,000 in total and with a 6 percent interest you are paying $500 per month. Then an accident totally damaged your car making it a total loss. Your insurance provider then said that the actual value of your car from the time of the accident was down to $20,000. Therefore this is all the money you will get from your insurance company. This sum would not suffice the amount you owed to the company who financed your car since you still owe them the exact value of the vehicle from the time you bought it plus interest, license fees and tax which in total is $27,000. Now there is a $7,000 difference from what your auto insurance company is willing to pay for your totaled car and the amount you are obliged to return to the finance company.
When caught in such scenario keep in mind that there is a kind of insurance that can actually help you deal with the situation. Gap Insurance is what we are talking about in here. Gap insurance is designed to address the problem described above. If you have this type of coverage you need not to worry about where to get the $7,000 gap between what you will get from your insurer and what you owe from your financer.
Such gap problem exists because of the fact that cars’ value depreciate. Different make and model of cars have different rate of depreciation nonetheless all cars in general depreciate fast. In fact your brand new car starts depreciating from the moment you drive it away from the garage of the place where you bought it.
