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Is GAP insurance a good idea now used car prices dropping fast?
- Thread starter MyEarHurts
- Start date
whisperingshad
Active Member
Agree always get gap insurance unless you put 20-30% down. The policies are cheap $500 + or -. 18 years ago I had a total loss and had a gap of around $2,500. That little gap policy was worth it. It's like any other insurance. Even if your putting down 10-15% I would still pickup gap coverage.
maggit13
Member
Agreed as well, I got mine through my Credit Union when I took out the loan. Only $350 for the life of the loan to cover any differences in value? no brainer.
fstop11
Member
It's a small price to pay to ensure all the idiots on the road out there don't wind up costing you more than your deductible.
As a former insurance adjuster, I always get gap. I saw lots of people lose a lot in accidents without it. You can usually add it on fairly cheap with your insurance company.
I didn't get it when I financed the car and my provider doesn't have it. What company do you recommend?
Most insurance companies should offer it, if yours doesn't, I'd say contact one of the other bigger ones and ask about it. I know geico offered it years ago, but not sure if they still do or not.
SECU of MD offers it. Its actually just a cancellation of the debt (up to $50,000) in the event of a total loss. Pretty good policy if you ask me....$50,000 is a pretty big gap. Loan has to be through SECU of MD of course.
I bought my Model Y at the end of December and started a new policy with Liberty Mutual a few days ago....would the new lower MSRP on 1/13/23 reduce my premium? I recall being asked how much I paid for the car when I started the new policy. The car was paid for cash so no loan on it, if that makes a difference. Thanks in advance
You have to have a loan balance or a lease to have a potential GAP to insure. GAP is the difference between market value on a totaled car and what is owed. If you have no loan, a totaled car can be replaced with a market value used car of comparable value no matter of there has been a huge drop like we have just seen.
Everyone with a loan balance significantly higher than the recent used car values should go to their lender or insurance company and protect themselves with GAP insurance.
Everyone with a loan balance significantly higher than the recent used car values should go to their lender or insurance company and protect themselves with GAP insurance.
Even if you put down 15-20% on the car when you took out the loan. A GAP policy is a good idea. Many leases will include GAP.
It's cheap insurance with many GAP policies costing between $400-$800. Could save some from thousands in negative equity.
It's cheap insurance with many GAP policies costing between $400-$800. Could save some from thousands in negative equity.
whisperingshad
Active Member
Anyone know of 3rd parties offering GAP insurance?
Bought my MY LR end of December and put 50% down.
My insurance company (State Farm) says they don't sell GAP, I have to contact the lender.
My lender (Wells Fargo) says they can't add GAP unless it was originated at the time of the loan, and I owe more on it than it's worth (which isn't the case since I put 50% down).
I told the rep at the time of the loan, the car was worth significantly more than it is today so it wasn't an issue at that time and I had no reason to add it.
Bought my MY LR end of December and put 50% down.
My insurance company (State Farm) says they don't sell GAP, I have to contact the lender.
My lender (Wells Fargo) says they can't add GAP unless it was originated at the time of the loan, and I owe more on it than it's worth (which isn't the case since I put 50% down).
I told the rep at the time of the loan, the car was worth significantly more than it is today so it wasn't an issue at that time and I had no reason to add it.
If you put 15-20% down, you shouldn't have a gap unless you've got like a long 84 month loan. With a 48 or 60 month loan, the balance owed should track under the car's value(unless you're a high mileage commuter) for a normal driver. With a 72 month loan, I would base my decision on the resale value of the car. With 84 month, I would probably get it since you'll probably hit negative equity sometime in the first few years of the loan since you're mostly just paying interest the first 2 years while your car depreciates to meet your down payment.
If you're a high mileage commuter, like 25k miles per year or more, I would ALWAYS get GAP insurance. The mileage you put on the car causes higher depreciation. Once you hit 120k miles, the value drops like a rock for the simple fact that most banks will not give used car loans over 120k miles. So you reduce the pool of buyers significantly.
Same situation with me. Took delivery late last year. $10k down. $55k loan owed with WF. If totaled car at today's prices I would be $10+ out.
I owe more on it than it is worth..........
Did they give any indication if you can get GAP within 30 days of purchase?
It all depend on "What type of GAP"
There are two GAPS offered.
1. Offered by the dealership themselves via 3rd party. DO NOT GET! I've seen people pay a lot for this BS policy. Not worth the money!
2. GAP provided by the Bank (Upcharge is not allowed from the dealership). Charges anywhere from FREE to $200. Must be taken when signing the loan. I would take this all day when financing primarily most of the car. If you are putting nothing down, 100% I am taking this GAP.
There are two GAPS offered.
1. Offered by the dealership themselves via 3rd party. DO NOT GET! I've seen people pay a lot for this BS policy. Not worth the money!
2. GAP provided by the Bank (Upcharge is not allowed from the dealership). Charges anywhere from FREE to $200. Must be taken when signing the loan. I would take this all day when financing primarily most of the car. If you are putting nothing down, 100% I am taking this GAP.
