As a vehicle owner, you may wonder whether you should consider GAP coverage, especially if you have a loan or lease on your vehicle. This is an important decision to make, as it can potentially save you from significant financial loss in the event of a total loss of your vehicle.
Below, we will explore what GAP coverage is, how it works and whether it is something you should consider. We will also discuss some important factors to consider when deciding whether to purchase GAP coverage, such as the value of your vehicle, your loan or lease terms and your own financial situation.
What Is GAP Coverage?
Simply put, Guaranteed Asset Protection (GAP) is an optional coverage that will cover or close the “gap” between what your insurance will pay and the amount you owe in the event your vehicle is totaled or stolen.
The last thing you would want to do after one of these unfortunate events is to have to pay out of pocket for the damage. Although we hope this never happens to you, GAP coverage reduces your financial risk in either of these events.
One main reason we encourage vehicle owners to add Guaranteed Asset Protection is due to the fact that the second you leave the lot, the value of your car decreases. This means that the amount you paid for your car is more than its resale value.
Do I Need Gap Coverage?
Whether you need gap coverage depends on several factors, including your vehicle’s value, your loan and lease terms and your financial situation.
If you have a new vehicle or vehicle worth significantly more than what you owe on it, gap coverage may be a good idea. If your car is stolen or totaled, your insurance company will only pay the vehicle’s actual cash value vehicle at the time of the loss, which may be less than what you owe on the loan or lease.
If you owe more on the vehicle than its cash value, you pay the difference out of pocket, which can be a significant financial burden. Gap coverage can help protect you from financial loss by covering the gap between what you owe and the vehicle’s cash value.
If you have a used vehicle or a vehicle worth less than what you owe on it, gap coverage may not be necessary. In this case, the vehicle’s cash value may be more than what you owe on the loan or lease, so there would be no gap to cover.
Ultimately, whether you need gap coverage depends on your individual circumstances. It’s important to consider your vehicle’s value, the terms of your loan or lease and your financial situation. It’s always a good idea to speak with an insurance professional or financial advisor for guidance.
How Does GAP Insurance Work?
Consider this example: You are driving to work along your normal route when another driver runs a red light and T-bones you. Your car is completely totaled and you were already upside-down on your car loan. Do you want to deal with the financial impact on top of your already frustrated emotions? How do you plan on paying for this?
These are the questions you should be considering when looking into GAP. There is, of course, the possibility that nothing ever happens to your car and you didn’t use the GAP coverage you paid for. But is that a risk you want to take?
How Do I Know What Company to Choose?
When you purchase a vehicle from a dealership, they are going to ask you if you would like GAP coverage. You can also look into coverage with your insurance provider.
Another option, which is where we come in, is to go through a third-party provider. Here at RefiJet, we work with industry-leading providers of GAP coverage. Due to this, we can negotiate a great rate for you. The cost could be lower than what you might be able to get through a dealership or individual lenders.
Can I Add GAP Coverage Later On?
Yes, you can! If you have been making multiple payments on your loan and have a decent credit score, refinancing may be a great option for you!
In the event that you decide to refinance your auto loan, you could decrease your loan payment or overall APR and add GAP insurance to your new loan. GAP will only add a few more dollars to your monthly payment. If you already have GAP coverage, we can help you cancel it. By law, your current GAP contract will not transfer to your new loan. However, you might be entitled to a pro-rated refund.
Get GAP Coverage Today
GAP overage can provide several benefits to vehicle owners who owe more on their loan or lease than the actual value of their vehicle.
Here are some of the potential benefits of getting GAP coverage:
- Protects against financial loss: GAP coverage can help protect you from financial loss in the event of a total loss of your vehicle, such as theft or a serious accident.
- May be required: If you lease a vehicle, the leasing company may require GAP coverage as part of your lease agreement.
- Provides peace of mind: Having GAP coverage can give you peace of mind knowing you’re protected from financial loss in the event of a total loss of your vehicle.
Contact us at RefiJet to learn more about how you can get GAP coverage.