What Is Gap Insurance?

What Is Gap Insurance?

When you get or lease a brand new automotive or truck, the vehicle starts to depreciate in price the instant it leaves the automotive heap. In fact, most cars lose twenty % of their price at intervals one year. normal motorcar insurance policies cowl the depreciated value; in alternative words, insurance pays the present market price of the vehicle. If you financial the acquisition of a brand new automotive and solely place down atiny low deposit down, the number of the loan might exceed the market price of the vehicle in its early years of possession. Gap insurance is out there to hide the “gap” between what a vehicle is price and what you owe thereon

It’s a good idea to consider buying gap insurance for your new car or truck purchase if you:

Made less than a 20 percent down payment.
Financed for 60 months or longer.
Leased the vehicle.
Purchased a vehicle that depreciates faster than the average.
Rolled over negative equity from an old car loan into the new loan.

While the car dealer may offer to sell you gap insurance on your new vehicle, most car insurers offer it—and it typically costs much less. On most auto insurance policies, including gap insurance with collision and comprehensive coverage adds only about $20 a year to the annual premium.