Do You Need Gap Insurance On A Used Car
Do You Need Gap Insurance On A Used Car?
Buying a used car can be a great way to get a reliable vehicle without breaking the bank. But it also comes with some unique risks that you won’t face when buying a new car. That’s why it’s important to understand all of the insurance options that are available when you purchase a used car. One such option is gap insurance, which can help cover the difference between the amount of money you owe on the car and its actual value, just in case something happens to it. Here’s what you need to know about gap insurance for your used car.
What Is Gap Insurance?
Gap insurance, also known as “guaranteed auto protection”, is a type of coverage that helps to protect you in the event that your car is totaled or stolen. It covers the difference between what you owe on the car and the actual value of the car, a gap that can be especially wide when you buy a used car. This gap can be thousands of dollars, and without gap insurance, your insurance company will only pay you the actual value of the car, leaving you responsible for the difference.
Do You Need Gap Insurance On A Used Car?
Whether or not you need gap insurance on a used car depends on a few different factors. If you’re financing the car, and you’re making a small down payment or no down payment at all, then gap insurance might be a good idea. That’s because in the event of a total loss or theft, you’ll still owe the lender the full amount of the loan, even though the car is no longer around. Gap insurance will help to cover the difference between what you owe and the actual value of the car.
If, on the other hand, you’re buying the car outright or you’re making a large down payment, then gap insurance might not be necessary. That’s because, in the event of a total loss or theft, the actual value of the car will likely be higher than what you still owe on the loan. In this case, gap insurance would provide you with coverage that you don’t really need.
How Much Does Gap Insurance Cost?
The cost of gap insurance will vary depending on a variety of factors, such as the type of car you’re buying, the age of the car, and the amount of coverage you’re looking for. Generally speaking, you can expect to pay between $20 and $50 per year for gap insurance. This is a relatively small price to pay for the peace of mind that comes with knowing that you’re covered if something happens to your car.
Where Can You Buy Gap Insurance?
Most insurance companies will offer gap insurance coverage, so you can likely add it to your existing auto insurance policy. You can also purchase gap insurance through your car dealer, although this option is usually more expensive than purchasing it through your insurance company. Lastly, you can shop around for gap insurance coverage through third-party providers, although you should make sure that any policy you purchase meets the requirements of your lender.
The Bottom Line
Gap insurance can be a great way to protect yourself in the event of a total loss or theft of your car. It can help to cover the difference between what you owe on the car and its actual value, so you’re not left with a huge bill. However, whether or not you need gap insurance on a used car will depend on a variety of factors. Make sure to consider your options carefully before making a decision.
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