What is Gap Insrance? Is it worth buying?
Answers:
If you lease a car Gap Insurance is something you'll need. Gap Insurance covers the difference between what the car is worth and what you owe. Say you get into an accident with a car you lease and still have $10,000 worth of payments. The vehicle is only worth $8000 according to your insurance company so you have to pay the leasing company the additional $2000. If you have Gap Insurance you won't have to pay the additional $2000, the company that provided your Gap insurance will pay.
if you don't own your car, it covers the difference between what you owe and the amount u get from insurance in a total loss
Gap insurance covers the difference between what the insurance company pays for a total write-off and what you actually owe on the note or lease agreement.
If you are leasing, gap insurance is worth the cost because if you total a leased vehicle, the leasing company treats it like any early termination. This will involve significant fees and costs that won't be covered otherwise.
If you are financing a vehicle you'll have to compare the likely value of the car vs the payoff on the note at several points of time over the life of the loan. If you put down a large down payment (1/3 or more) it is probably not worth it as you'll always owe less than the vehicle is worth. If you finance the full purchase price, then you'll be upside down for a significant amount of time and should consider gap insurance.
Hi,
Just wanted to offer a little input, the other answers are correct of course about what it is and the purpose. You have analyze your particular situation and determine if it's right for you.
I have seen numerous cases where it has been beneficial, and seen others that wished they had purchased.
There was a recent post on Yahoo answers where a lady had this happen, car was wrecked and totaled, didn't have gap and consequently the insurance company didn't pay off the entire loan.
Different financial and insurance institutions offer gap insurance as well, such as credit unions, but they may require you to finance with them.
Check around with your insurance company, credit unions etc and see what they offer and compare cost.
Jerry Christopher
http://www.usedcarwise.com
The answers post by the user, for information only, UKQnA.com does not guarantee the right.