Imagine this: You've strolled into your favorite car dealership (ahem, Eckert Hyundai) and you have you eye on a shiny new Sonata...who doesn't? You've worked with your salesman to determine the cost you'll get for your trade in, and what you are planning to pay for your new car. And you have a nice little down payment to go toward your new wheels. Congratulations, you are almost finished!! All you have left to do is work out the financing of your new vehicle...sigh, you were never good at math.
As you listen to the finance man patiently try to explain every aspect of your car payment to you some things fly over your head...they do to me too. After working at this dealership for 2 years, I finally leaned over and asked, "What is Gap Insurance?" and I'll be honest, I was a little embarrassed to ask.
Not only did they explain the concept to me, but I decided to do a little research. So next time you're buying a car here and our delightful finance men can't help you understand, poke your nose around and find me...I'm becoming an expert....sort of.
I found an entire article on Gap Insurance at Carinsurance.com, you can read it there if you so desire. Here's the jist...Gap insurance is for you if you are financing a new (or even used) car in which you are taking out a loan. Mostly for new cars, because as soon as you drive that puppy off the lot there is a loss in what an insurance company thinks the "value" of the car is. And, my friends, if you make minimum payments on a car over a 5 or 6 year time period, you will quickly be "upside down" in a car. Solely meaning that your car is worth less than you have to pay the bank. No biggie, it's one of the cool things about America. You can purchase a car and pay it off slowly. Blah, blah blah, why get Gap Insurance??
Explanation.
Try this dream on for size: you're driving down the road in the shiny new Sonata you bought and some...person...slams into you. First you think, "ouch," don't worry, in this dream you are OK. But your car is considered "totaled" by the insurance company. Meaning the cost to repair is more than what your car is worth. The insurance company will shell out the bucks to pay you back for what your car is worth...but because you haven't finished paying off your car, you owe the bank money still (for this sake we'll say $2,000). And you think, "I owe money for a car that has been dragged away to the trash pile?!" and the bank says, "yes, pay up." Aren't you glad you got Gap Insurance?? Gap insurance pays the bank what you owe (they fill in the "GAP"). Then you can take all of the money you got for you car and try to replace your old, crushed friend. Something even cooler. If you aren't upside down in your car....Gap Insurance will pay your deductible! Boy, oh, boy, learn something new every day.
Try this dream on for size: you're driving down the road in the shiny new Sonata you bought and some...person...slams into you. First you think, "ouch," don't worry, in this dream you are OK. But your car is considered "totaled" by the insurance company. Meaning the cost to repair is more than what your car is worth. The insurance company will shell out the bucks to pay you back for what your car is worth...but because you haven't finished paying off your car, you owe the bank money still (for this sake we'll say $2,000). And you think, "I owe money for a car that has been dragged away to the trash pile?!" and the bank says, "yes, pay up." Aren't you glad you got Gap Insurance?? Gap insurance pays the bank what you owe (they fill in the "GAP"). Then you can take all of the money you got for you car and try to replace your old, crushed friend. Something even cooler. If you aren't upside down in your car....Gap Insurance will pay your deductible! Boy, oh, boy, learn something new every day.
The cool thing is, Gap doesn't cost very much. A few hundred bucks, and it's rolled into your car payment, so you end up paying a few dollars a month for lots and lots and lots of protection. And the exciting side is that if you pay off your car early, they will cut you a check for the months you didn't need coverage.
Does it seems like a good idea to you now? It should.
And then HOPEFULLY this will not happen to you...but that's why you got Gap Insurance, right?
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