Gap Insurance

[rodrego66]

Wonder what everyone's thoughts are on gap insurance. Up until this point, we have typically paid cash for cars so we did not need it. We decided to finance our M3 (taking possession Saturday) so we are debating the need for gap. We are financing about $40,000, and plan to pay more than the minimum so just wondering what the value is in doing it.

 

[BLKMDL3]

Wonder what everyone's thoughts are on gap insurance. Up until this point, we have typically paid cash for cars so we did not need it. We decided to finance our M3 (taking possession Saturday) so we are debating the need for gap. We are financing about $40,000, and plan to pay more than the minimum so just wondering what the value is in doing it.

I would. Saved my a$$ when our old X was totaled. Saved about $7k

 

[NathanielHrnblwr]

doesn't it largely depend on being upside down on the loan? i.e. if you financed 100% and car got stolen/wrecked in the first year, you may end up with a loan larger than the value of the car?

If one is financing $40k, you'd never be upside down on the loan.

Maybe I just don't understand GAP?

 

[Jedi2155]

Wonder what everyone's thoughts are on gap insurance. Up until this point, we have typically paid cash for cars so we did not need it. We decided to finance our M3 (taking possession Saturday) so we are debating the need for gap. We are financing about $40,000, and plan to pay more than the minimum so just wondering what the value is in doing it.

So I originally was planning a $45k loan and about $15k down. After decided to take on Gap, I decided to increase my loan to $56k (although should've done 70k and took the P-AWD har har har...) but generally with gap you want as little down as possible to decrease your risk. I got an additional 0.25% discount off my loan by paying the $450 price for gap (1.74%). My plan is still to make the minimal payments until I have the full amount required to pay off the loan in 2-3 years then pay off the entire amount at once.

Basically for the 1st year or 2 there's a high chance that the vehicle is worth more than your loan but by the end of the 2nd or 3rd year they might be more equal and thus limited value in the gap where reducing the interest is your best bet.

 

[NathanielHrnblwr]

Basically for the 1st year or 2 there's a high chance that the vehicle is worth more than your loan

Can you explain the problem with this scenario? If the car is worth more than the loan, the loan gets paid off and you get the rest of the $, no?

 

[Jedi2155]

Can you explain the problem with this scenario? If the car is worth more than the loan, the loan gets paid off and you get the rest of the $, no?

Sorry I meant the reverse! The loan is worth more than your car, which is what gap is suppose to cover.

 

[chronopc]

I bought gap insurance. First time ever that I did. It was only $350.

 

[brobinson]

I would check with your insurance company before paying for gap with the lender.

Liberty mutual offers new car replacement and they offer gap coverage that repays a percentage of the cars value if loan amount > vehicle value when totaled. You can run that for a year at like $10/mo and then take it off of the policy.

 

[chronopc]

I would check with your insurance company before paying for gap with the lender.

Liberty mutual offers new car replacement and they offer gap coverage that repays a percentage of the cars value if loan amount > vehicle value when totaled. You can run that for a year at like $10/mo and then take it off of the policy.

I can confirm that GEICO doesn't offer gap insurance coverage.

 

[rodrego66]

I would check with your insurance company before paying for gap with the lender.

Liberty mutual offers new car replacement and they offer gap coverage that repays a percentage of the cars value if loan amount > vehicle value when totaled. You can run that for a year at like $10/mo and then take it off of the policy.

Same thing for mine. Ameriprise offered it to me for about $20 for six months versus $400 from the lender.

 

[C141medic]

I would check with your insurance company before paying for gap with the lender.

Liberty mutual offers new car replacement and they offer gap coverage that repays a percentage of the cars value if loan amount > vehicle value when totaled. You can run that for a year at like $10/mo and then take it off of the policy.

I have similar from Allstate; however, it’s only for the first 3 years. I also bought GAP insurance ($400) which would continue to cover me after new car replacement ends from Allstate. Imho, $400 is great value if you finance a big portion of the vehicle.