I give it the thumbs down. You should have money available for emergencies, which wrecking a new car might be. If you have to have GAP insurance, you probably can't afford the car you just bought. And chances of a new car being totaled where it would be required are small IMO (vs repaired). (But my answer is skewed by the fact that my nephew owes $7K on a car he couldn't afford in the first place)
Of course, I don't get insurance for most consumer items (phone, TV, etc.)* because I would rather pay for the occasional repair/replacement than pay for insurance on everything.
*(in case it's not obvious, I do have insurance for the big things: home, health, regular car ins., etc.)
I give it the thumbs down. You should have money available for emergencies, which wrecking a new car might be. If you have to have GAP insurance, you probably can't afford the car you just bought. And chances of a new car being totaled where it would be required are small IMO (vs repaired). (But my answer is skewed by the fact that my nephew owes $7K on a car he couldn't afford in the first place)
This is my thought, too. I feel like the money I have saved over the years by not buying unnecessary insurance would more than cover me in the unlikely event that I total my car in the very short period of time that I owe more than it's worth (if I ever owe more than it's worth; I did put down a sizeable DP).
Can you carry GAP for just a certain amount of time? It was offered to me as $300 prorated over the life of my car payments.
Post by Norticprincess on Aug 28, 2012 14:38:54 GMT -5
I had gap on the first car I bought out of college. It was $7 every 6 months through my car insurance company. Don't have it on my new car, but I put down more than half of the car, vs the 10% I put down on the first one. First purchase was ollowed by a quick drop in kbb value due to Ford's employee pricing phase. Only had gap on the first one for about 18 months $21.
If you are going to be upside down on a loan then I would get it. I can tell you it's the worst thing to tell someone "sorry, we're only paying $xx,xxx on the total loss and you will have to continue to pay the lienholder for a car you no longer have."
Well you can explain it away all you like but I had a 2000 Grand Am for 9 months. It was brand new when I bought it and I got a decent deal it. It wasn't a smokin deal but it was good considering I was working on rebuilding my credit. We didn't get gap insurance on it though it was offered. We explained it away with all the things others are saying here.
When the car was totaled, the party at fault was driving a rental car. Rental agencies are typically self insured. That means they pay you themselves for damages. I ended up being left with a completely totaled vehicle with a salvage title and about $5000 remaining on the loan. I was so lucky to have been left with the car unlike other insurance companies they would take it and pay you for it. Leaving you with nothing but hopefully a paid off loan. In this case I was able to sell the car to a salvage yard for the amount I owed on my loan and pay it off. Had I not been fortunate enough to have the car to sell, I would have had a $5000 balance to pay off with nothing to show for it. That was quite a scare. That experience alone has lead us to always carry gap insurance on our vehicles. We always buy new so that's a big reason for it. It can be put into your loan at the time of purchase or it can covered by your insurance company. It's cheaper for us now to go through our insurance but it's always good to check with them first before you turn it down on your loan. For as little as you pay for it, it's worth the peace of mind for me
Post by mollybrown on Aug 28, 2012 16:57:40 GMT -5
What type of car is it? Some depreciate faster than others, and that would factor into my decision.
It's great in theory to save the money for gap insurance and put that towards a totaled new car. If you go that route, be sure that you have what you will owe the loan company, plus the down payment for a new car. You have to balance the desire to save less than $20 a year with the risk of owing the balance on a car loan if the car is totaled.
Post by Doggy Mommy on Aug 28, 2012 17:56:12 GMT -5
I'd get it. It isn't expensive and it's worth it for the peace of mind. My sister's newer car was totaled a couple weeks ago and the insurance payout is pretty low.
I had NO idea it was so inexpensive. We bought a 2013 Elantra in April... I just sent my insurance agent an email to start the process of adding it. Glad this topic was brought up today.
Post by marriedfilingjoint on Aug 28, 2012 18:16:55 GMT -5
Hmm. Now I'm having second thoughts. I didn't know it would come into play even if another driver was at fault.
Is there some kind of calculator to determine if I'm likely to ever be upside down?
I got a 2013 Sonata. They are holding their value extremely well which is why I bought new instead of preowned.
If it was offered to me at $20 a year it would be a no-brainer, but like I said, it was offered to me for $300. I'll see what my insurance agent says tomorrow.
Hmm. Now I'm having second thoughts. I didn't know it would come into play even if another driver was at fault.
Is there some kind of calculator to determine if I'm likely to ever be upside down?
I got a 2013 Sonata. They are holding their value extremely well which is why I bought new instead of preowned.
If it was offered to me at $20 a year it would be a no-brainer, but like I said, it was offered to me for $300. I'll see what my insurance agent says tomorrow.
I would look at your loan balance compared to the value of your car. You can check Kelly Blue Book to get a rough estimate of value. If you owe more than the car is worth or close to it then I would recommend getting it.
Post by puppiesandrainbows on Aug 28, 2012 21:41:45 GMT -5
Hyundai's depreciate very quickly. Also, there are two ways to buy Gap insurance. You can buy it as part of the car purchase and it gets rolled into the loan, or your auto insurance carrier might offer it as an option, but not all of them do.
And if you want "real" advice as to whether or not you should get Gap insurance, you should tell us the purchase price, down payment, and loan balance on the car.
300 for the life of the loan is cheap. It IS a no brainer. If its new, you are upside already.
You don't even know what my trade in and down payment were.
Okay, I'm confused. It seems obvious that you're upside down on the car because you're asking about gap insurance. If you aren't, then gap insurance would be a waste of money.
If when you drive off the lot and you owe more than what KBB says it's worth than absolutely. I would check with your auto insurance though. There's no point in gap insurance anymore once your regular insurance will cover the car 100%.
If when you drive off the lot and you owe more than what KBB says it's worth than absolutely. I would check with your auto insurance though. There's no point in gap insurance anymore once your regular insurance will cover the car 100%.
This will not be relevant for most people until they are very close to having the car paid for. Also it is way more common to buy the gap insurance at the time of purchase as opposed to getting it through your auto carrier, so it's still not relevant for most people.
Not everyone has a big chunk of cash to put down nor to save the day should the car get totaled and be worth less than the loan payoff. Gap insurance is awesome and saved my ass when I was younger, broke as fuck and single.
I would instead look at your regular auto insurance and see if you can get a replacement cost coverage endorsement so they would pay what a replacement vehicle would be instead of actual cash value (depreciated value). I think most companies you can get that coverage for maybe the first year or 2 you own a new vehicle, but I don't know how expensive it is.
Just a thought, especially if your down payment/trade in cause you not to be upside down.