Is Gap Insurance Worth It On A New Car
Is Gap Insurance Worth It On A New Car?
When you buy a new car, you want to make sure that you are protected in case of an accident. Many people purchase gap insurance to protect the remaining balance of the loan if their car is totaled or stolen. But is gap insurance really worth it?
What Is Gap Insurance?
Gap insurance is a type of insurance policy that covers the difference between the amount of money owed on a car loan and the actual value of the car. In the event that a car is totaled or stolen, the insurance will cover the difference so the car owner does not have to pay out of pocket for the remaining balance.
Why Would I Need Gap Insurance?
Gap insurance is most beneficial for those who have taken out a loan for a car. When you take out a loan for a car, the car is depreciating in value as soon as it leaves the lot. This means that if your car is totaled or stolen, you could owe more money than what the car is worth. This is where gap insurance comes in.
What Does Gap Insurance Cover?
Gap insurance covers the difference between the actual value of the car and the amount of money that is still owed on the loan. It will also cover the deductible on your regular car insurance policy. Gap insurance can also cover the cost of leasing a similar car while you wait for your car to be replaced.
How Much Does Gap Insurance Cost?
The cost of gap insurance varies depending on the company and the amount of coverage you purchase. Generally, gap insurance costs between 2-5% of the total loan amount. For example, if you take out a loan for $20,000, gap insurance could cost anywhere from $400-$1,000.
Is Gap Insurance Worth It?
Gap insurance can be a great way to protect yourself and your finances if your car is totaled or stolen. It is especially beneficial for those who have taken out a loan for their car, as they may still owe money on it even if it is totaled or stolen. Gap insurance is relatively inexpensive and can provide you with peace of mind knowing that you are protected.
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