Gap Auto Insurance 101
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UPDATED: Jan 18, 2012
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You may or may not have heard of gap insurance before, but if you need it and do not have it, you may soon find out how important it truly is. It also means finding out the hard way. GAP insurance actually stands for Guaranteed Auto Protection. Without it, you could end up paying for a brand new car you don’t even have. So now that you realize what a frightening prospect that could be, it is time to understand a little about what gap insurance does for you.
The difference or gap between what you owe and what the car is worth is what gap insurance coverage is all about. When you take out a loan for a car, usually the car is worth less than the amount owed. So keep in mind a few things:
- Buying brand new cars is the easiest way to end up with a loan that is of greater value than the car.
- This is especially true for new cars when you have little to no down payment.
- If you have no trade in or a trade in of little value, you will probably be involved with a loan amount of greater expense than the car is worth.
- If you are “upside down” on your trade in, you will certainly be in this situation. Being upside down means you owe more than the car is worth. For an upside down trade in, it means bringing in a car you still owe on, which means that deficit is tacked on to the car you are buying.
Now what it important to understand is that exactly the gap insurance coverage will do for you. Once you know this and you are looking to buy a new or used car, you can get gap insurance quotes and secure the right policy for you right away.
When Does Gap Auto Insurance Help?
You drive that brand new shiny dream car of yours off the lot only to come out the next morning and find it stolen. If your car ends up stolen or involved in a wreck that leaves it totaled, your gap insurance is your safety net. Going without it really is like taking that gamble of walking a tight rope without a net. You never know what could happen or when it could happen. Without the proper insurance coverage in place, that new car that someone else stole or someone else demolished could still end up costing you a fortune.
If you do not have a gap auto insurance policy in place, you can plan on continuing to make those car loan payments even without that brand new dream car around to drive. You are still responsible for the loan you took out even if the car is wrecked beyond repair or stolen never to be seen again.
Now that you have an understanding of the importance of gap insurance 101, its time to get your gap insurance quotes in order. Just fill in your zip code and get competitive rates from gap insurance providers as easy as 1-2-3.