Gap Insurance Is Critical For The New Car Buyer

We are beginning to hear the term gap insurance more frequently. Many people may still be unclear as to what it is exactly. This is coverage that has been created for new vehicle owners who find themselves in negative equity when they first make their purchase. GAP means Guaranteed Auto Protection and it is effective during the first three or so years of the car loan.

A new car owner will find that the minutes they driver their vehicle off the car lot the value of their new vehicles will have plummeted by 11%. One year later the vehicle is worth 20% less than it had been 12 month's ago. The new owner could easily find themselves upside down in their ownership. The reasons for this are taxes and licensing fees combined into the owed sum will have the interest added to them. A lower than 20% down payment coupled with a high interest rate are also contributing factors.

If the buyer should have the misfortune of having the car declared a total write off due to fire, flood, vandalism, accident or theft then the insurance company would pay the cash value of the vehicle but not the difference. The gap coverage will pay the difference between what the owner owes and the actual value of the vehicle that is outlined in the Blue Book. Sometimes the gap insurance will also pay the deductible too.

Gap coverage can be bought from the car dealer, the lien holder's loan company, The insurance company that insures the vehicle or an independent gap coverage provider. Owners can execute a cost comparison process and use A. M Best as a resource to check the reputation of the gap coverage company. This coverage can also be extended to an RV or horse trailer loan.

One of the largest expenses is the depreciation of the vehicle. This will cost more than maintenance and fuel costs. The second largest expenditure is being overcharged for gap coverage. The research spent in looking around and making price comparisons will help save a lot of money. Often the new car buyer is so excited about driving their new car off the lot they do not carefully read the gap insurance contract.

There is a fourteen day grace period where most policies allow a cancellation. Informing oneself about gap coverage ahead of any purchases will be the best strategy to follow. The car buyer will have the power in their hands and control how much money is realistic to pay out.

Prior to purchasing a new vehicle it is a good idea to ascertain the resale value of the new car. The buyer may want to see how it will fair a few years down the road. Car reviews will indicate which models get good reviews and are valued by the consumer.

Gap insurance added to one's car insurance is usually very affordable. Once the car buyer has passed the negative equity area they can cancel their gap coverage. It cannot be over emphasized how important doing due diligence is when trying to make the best economic decisions. The internet provides a ready source of information. Agents are usually available 24/7 on chat and/or by phone.