GAP Insurance - Question on value of it...

[Runs Kwh]

Hi, in the midst of working with Alliant on loan. We are going to be financing around $65-70K of the loan (to keep payments around $1K/monthly). This means, we'll pay cash of around $30K.

In this situation, will GAP insurance be needed?

My understanding is that GAP insurance pays the difference between amount owed on car and the book value of the car. However, we'll have very positive equity on the car from the get-go. It doesn't seem like it would be needed, unless we just put down something like 10% (instead of the about 25-30% we are putting down).

Thoughts?

 

[Jhall118]

You don't need GAP insurance. My situation was identical to yours, and my Alliant agent even flat out said I didn't need it, but he had to offer it.

There is no way you will ever have negative equity in the car with such a large down payment.

 

[Apoclyps]

But isn't the GAP insurance a onetime payment?

 

[bryenz]

But isn't the GAP insurance a onetime payment?

It is. But gap only pays off if your car is a total loss or is stolen, and you owe more than the insurance pays. Gap makes a lot of sense with Teslas for those of us who took advantage of nutso cheap money (DCU, I'm looking at you) and levered up. I paid $295 for DCU's peace of mind, if god forbid something happens the first week...

If you put more than, say, 25% down then I agree it's a waste.

 

[Moparposterchild]

I have had the most difficult time finding GAP for my car. I live in Los Angeles and I financed through Chase and I have Geico insurance. Neither Chase nor Geico offer GAP so I've been looking for a trustworthy third party provider but have had no luck. Any suggestions??

 

[tdiggity]

What about gap insurance through your insurance company? My insurance charges me $20 for every 6 months. My plan is to stop paying for the gap insurance once the car is 2-3 years old. In the end, i'l have paid < $100.

 

[Alysashley79]

I have had the most difficult time finding GAP for my car. I live in Los Angeles and I financed through Chase and I have Geico insurance. Neither Chase nor Geico offer GAP so I've been looking for a trustworthy third party provider but have had no luck. Any suggestions??

id maybe shop around for a different insurance company! If you need the gap insurance you don't want tobe in a position heaven forbid to be out a $100k car AND possibly owe the bank $ and therefore not be able to replace your car if you were to get in an accident. For me. No GAP was a deal breaker.

 

[Insureit1]

I have GAP insurance on every car I own and with interest rates so low borrowing money is cheap and usually finance 100% when possible. Just think about what the OP is doing. He is putting $30k down on a new car. If he drives off the lot and one week later the car is totaled he may not be out the total $30k down but he will be out a big chunk of that $30k. I represent several insurance companies that offer both GAP insurance AND FULL replacement cost coverage if the car is totaled in the first two years. If you pay cash or put a bunch of money down you should get a full replacement endorsement if you can. If you borrow 90-100% get the GAP insurance. I have seen dozens of claims when people were shocked they had a totaled car (through no fault of their own) and still had to pay out of pocket to pay off the loan.

 

[Runs Kwh]

Thanks all. I'm going to pass on the GAP insurance, since I'm putting down a chunk of cash.