Where can I buy gap insurance?

Gap insurance is available from your car dealer, lender or insurance company. If you buy it from your car dealer or lender, you may have to pay for it up front. If you buy it from your insurance company, they may include it in your car insurance payment. If you lease a car, it may be included in your lease, so you should check it before you sign the documents. What is new car replacement insurance? If you are buying a new vehicle, in addition to gap insurance, consider new car replacement coverage. Some insurers include this coverage in your auto policy, while others offer it as an add-on. With new car replacement coverage, if you total your new car before a certain number of miles or a certain period of time, your insurance company will replace the car. The replacement will be a new vehicle of the same make and model and have the same equipment as your original vehicle. Buying or leasing a car is a big decision. It is important to understand the financial risk involved in selecting and financing a car and to minimize that risk as much as possible. Gap insurance can help. Like other types of insurance, even if you hope you never need it, having it gives you peace of mind and financial relief in the event of the unexpected. Hopefully, this article has helped you figure out if buying gap insurance makes sense for your specific situation. When you first buy a new car, you're probably excited about driving your vehicle, not the car loan you got to finance it. But what if you totaled your car? Would you have sufficient cash to take care of the credit? In many cases, the answer is yes. Standard auto insurance can pay for covered repairs and even the cost of replacing the vehicle if it's badly damaged or stolen. But sometimes the insurance money isn't enough to pay off the loan. That's because you may owe more than your car is worth. Why is my car worth less than I owe? The idea that you owe more than your car is worth can be hard to grasp, but it's a fairly common scenario. Industry insider Edmunds.com reported in April 2020 that a record 44% of car buyers are "drowning" in their loans. That means all of those cars were worth less than their owners owed on their auto loans - an average of $5,571 less! Wondering how this happens? It's easier than you think. Maybe you invested little (or no) money when you bought the vehicle, financing most of your purchase, adding interest to the total cost of the car. Maybe you even rolled what you still owe on your old car into your new loan. Or maybe you took out a long-term car loan (i.e., 48 months or longer) to reduce your monthly payments. Doing either of these things means that less money goes into the principal amount you borrowed, so it takes longer for your loan to decrease than the value of your car. What is depreciation? But why does the value of your car decrease? Even though you are making payments based on the value of your car when you took out the loan, your car is getting older and worth less every day. This is due to depreciation. Deterioration is the decrease in worth of a resource because of mileage. And when that asset is something you and your family use frequently, like a car, wear and tear has a significant impact on its value, especially if you've purchased a new car. As soon as you take the car off the lot, its value starts to drop, but you're still responsible for the full amount of the loan plus interest, so the gap between the value of what you own and what you owe starts on the first day of ownership. .of the car. What is Gap Insurance? If the car is stolen or destroyed before you pay off your loan, you may have trouble paying for a replacement vehicle, while dealing with the physical and emotional trauma of the accident or theft. Gap insurance can ease the tension. Gap insurance pays the difference between the value of a vehicle when it is stolen or "written off" (that is, when the cost of repairing the damage to the car is greater than the cost of replacement) and the balance of your car loan or lease. In other words, it fills the "gap" between the current value of the vehicle and what you still owe. Is there anything that gap insurance does not cover? Gap insurance can cover some of the financial burden if you owe more than your car is worth when it is damaged or stolen. However, there are some things it doesn't cover, including: Cost of warranty extensions Non-refundable security deposits for leased vehicles Rental or loan payments due at the time of loss Rent punishments because of unusual mileage, inordinate use or high mileage Accident, borrower, disability or health insurance associated with the loan or lease Deferred balances from previous loans or leases Do I need gap insurance? If the amount you owe on your car loan or lease is not greater than the current value of your car, you may not need gap insurance. To estimate this, find the Kelley Blue Book value of your vehicle, then compare it to your current loan or lease balance. Don't forget to count the deductible you would pay in the event of an accident or theft (if applicable), as well as any of the items listed above that may not be covered by gap insurance.