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Old 03-31-2014, 03:05 PM
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To Gap or not to Gap? Insuring your purchase...

I will be taking delivery of my new Summit either today or tomorrow. Just waiting for it to get to the dealer. I usually always lease my cars but this time I am leaning towards buying. For those of you who buy, what are your thoughts on Gap insurance? Do you spend the money or do you take the risk?
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Old 03-31-2014, 03:19 PM
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Re: To Gap or not to Gap? Insuring your purchase...

If you total your vehicle the insurance will only pay the book value of the vehicle. So if God forbid you total your car the second day of ownership, you will still owe the bank over $10k that insurance will not cover due to depreciation.

My credit union's is only $250 and I have seen other banks at $500. It's a one time payment you can add to your loan.
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Old 03-31-2014, 03:54 PM
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Re: To Gap or not to Gap? Insuring your purchase...

Only buy insurance if you can't afford the loss and the cost/benefit is something you need to sleep well at night. Insurance always costs more than your expected outlay....to cover sales costs, admin costs, and profit.

Think of it this way, if you paid cash instead of financing and you got in an accident, you'd be in the same position as financing and getting into an accident. Would you buy "gap insurance" if you paid cash up front?

Don't pay $500 for a very small $3000 risk, etc.
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Old 03-31-2014, 04:00 PM
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Re: To Gap or not to Gap? Insuring your purchase...

One other thought.....can't you buy gap insurance from anyone? The dealer, no matter how great, may not be the best place to buy it.
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Old 03-31-2014, 04:10 PM
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Re: To Gap or not to Gap? Insuring your purchase...

If you are putting a decent amount down, there should not be any "gap" at the time of a loss. Check your state insurance laws, but many states if you total the car within a certain amount of time, the insurance company owes you the price of a brand new car. That protects you against that initial drop in value. After that, unless you finance most of it, the monthly payments should keep up with depreciation.


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Old 03-31-2014, 05:10 PM
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Re: To Gap or not to Gap? Insuring your purchase...

My insurance company only changes $100 for new car replacement coverage way cheaper than any gap insurance I have ever see with our jeep you should only need that for 2 years at the most after that your loan should have caught up with the value of the car.

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Old 03-31-2014, 05:56 PM
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Re: To Gap or not to Gap? Insuring your purchase...

Quote:
Originally Posted by bill_de View Post
If you are putting a decent amount down, there should not be any "gap" at the time of a loss. Check your state insurance laws, but many states if you total the car within a certain amount of time, the insurance company owes you the price of a brand new car. That protects you against that initial drop in value. After that, unless you finance most of it, the monthly payments should keep up with depreciation.


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How close to "new car replacement coverage" does such an option get to reality?
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Old 03-31-2014, 06:07 PM
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Re: To Gap or not to Gap? Insuring your purchase...

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Originally Posted by lstowell View Post
How close to "new car replacement coverage" does such an option get to reality?
Where I worked 100%. When I had to handle them I would ask for the bill of sale. I would then call the salesman who sold them the one that got totaled and ask how much to replace it. IIRC there was a mileage deduction over a certain amount, based on a chart in the state regulations. It wasn't much.

Another rather inexpensive option is new car replacement for 3 years. If your '14 gets totaled in '16, you get paid for a '16. Usually only applies to collision losses.


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Old 03-31-2014, 06:47 PM
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Re: To Gap or not to Gap? Insuring your purchase...

Thanks everyone. You gave me some things to think about.
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Old 03-31-2014, 08:33 PM
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Re: To Gap or not to Gap? Insuring your purchase...

You should always have Gap insurance. You total the vehicle at any time and the loan is paid off.E0ven if you are upside-down. On a lease or a finance even if you buy or lease with zero down at zero percent interest and you total it you may not have enough to pay it off. Most leases have it included. You drive it off the lot and it depreciates about 10 grand. You will get the best price on Gap insurance from the company that insures your car. Dealers make a hugh profit when it's sold through their finance department.
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Old 04-01-2014, 05:56 AM
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Re: To Gap or not to Gap? Insuring your purchase...

If you total a new vehicle then chances are you didn't survive to collect any gap insurance.
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Old 04-01-2014, 06:20 AM
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You should always have Gap insurance. You total the vehicle at any time and the loan is paid off.E0ven if you are upside-down. On a lease or a finance even if you buy or lease with zero down at zero percent interest and you total it you may not have enough to pay it off. Most leases have it included. You drive it off the lot and it depreciates about 10 grand. You will get the best price on Gap insurance from the company that insures your car. Dealers make a hugh profit when it's sold through their finance department.
I think dealers make a huge amount profit on this offering period. I couldn't disagree more about "always have gap insurance" comment. Maybe I missed a key detail above, but the only way I would even consider recommending gap insurance is if the person purchasing the vehicle was putting almost zero down with a lengthy loan. There are better options mentions above to reduce the financial hit of totaling a brand new car.
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