Gap insurance

[inferno]

What's everyone's feelings about gap insurance? My son's Maverick is due into the dealership any day and he is financing and planning to only put $1000 down. I know that the dealership will try and talk him into it and I just want to make sure he makes the right decision.

Sponsored

 

[Buzz_Bronski]

What's everyone's feelings about gap insurance? My son's Maverick is due into the dealership any day and he is financing and planning to only put $1000 down. I know that the dealership will try and talk him into it and I just want to make sure he makes the right decision.

I'd compare it with what your auto insurance offers. Didn't do it on the Maverick since I put 9k down. But I did on my last car through the dealer. Was a few bucks extra per month to their lender.

Then you get into the debate on the depreciate aspect of this truck. Not sure what the consensus is on what depreciation looks like, but trucks seem to fair moreso than cars with value retention.

 

[TSAINTS1115]

It's a ripoff. So is buying an extended warranty through the dealership at the time of sale. And we might as well touch on finding out your best interest rates for the loan beforehand so you know if what the dealership offers is good or not.

 

[bgillen35]

Does he have the cash on hand to pay off the remaining balance on the vehicle if it were to be totaled? Is he a responsible driver or risk of an accident/any prior accident history?

Insurance is too much like gambling.. it depends on too many factors.

I personally don't get it but I'll only be financing about 30-40% of the vehicle and have emergency funds saved should something unfortunate happen.

 

[JSchmidt]

I actually called my Allstate Agent and asked about both gap insurance and car replacement insurance. I was pleasantly surprised that they offered care replacement insurance at a very low price. If my Maverick is totaled they will give me money to replace it with a model year newer and fewer miles. That would cover the existing loan and maybe have some left over for a down payment on another car. They did offer gap insurance, but it was much more expensive for some reason. I would check into options other than from the dealer, which are heavily marked up to make a profit. Just like their extended warranty plans, etc.

 

[Fish Chris]

I actually called my Allstate Agent and asked about both gap insurance and car replacement insurance. I was pleasantly surprised that they offered care replacement insurance at a very low price. If my Maverick is totaled they will give me money to replace it with a model year newer and fewer miles. That would cover the existing loan and maybe have some left over for a down payment on another car. They did offer gap insurance, but it was much more expensive for some reason. I would check into options other than from the dealer, which are heavily marked up to make a profit. Just like their extended warranty plans, etc.

I like this. My GF did get gap insurance, but we plan to cancel it just as soon as the first payment comes up, and she mostly, if not completely pays it off. On the extended warranty thing, she went for the lower one there, but also cancelable.... and I told her, just ask my ace mechanic friends advice next week when we see him for an oil change on her old car. I think she needs to hear about all that from someone else At least she listened to me, and kept up the fight, getting our price all the way down to the original price (close to MSRP) they had offered us. That was a 6 hr battle ! Glad she was as stubborn as I am. That's not always good, but this time, we were a team of stubbornness lol

 

[Bunkyg]

Whether your more comfortable with Gap or extended warranties is a personal preference. With that being said, Dealers charge upwards of $1000 for Gap Whereas Credit unions charge around $300 for the exact same policy. same insurer as the dealer. If you have a credit union available to you it may be worthwhile to check rates and costs compared to a dealer

 

[MakinDoForNow]

It's a ripoff. So is buying an extended warranty through the dealership at the time of sale. And we might as well touch on finding out your best interest rates for the loan beforehand so you know if what the dealership offers is good or not.

Like all insurance not worth it until you need it. Consider if hail damage (or whatever) totals car in first 3 years "can he write a check for the difference between the amount still owed and the depreciated amount the auto insurance will pay? How many people are upside down on their vehicles in the recent tornados? How many had not paid $50-$75 per year more on their home owners to bump their "contents" coverage?

 

[MLowe05]

If you're financing nearly 100% of the cost - this is vehicle (likely at MSRP) plus taxes and fees.. he should take the GAP.

GAP is an insurance product. A ripoff until you need it.

 

[Paulsr]

What's everyone's feelings about gap insurance? My son's Maverick is due into the dealership any day and he is financing and planning to only put $1000 down. I know that the dealership will try and talk him into it and I just want to make sure he makes the right decision.

Daughter totaled my car 1 year old car with out gap insurance cost me 3 thousand out of my pocket

 

[MLowe05]

Daughter totaled my car 1 year old car with out gap insurance cost me 3 thousand out of my pocket

Happened to me, as well. $2,500 out of pocket on a Nissan Altima.

Back in 2014, I had a Mercedes E-class get totaled in a house fire. It was relatively new, and the depreciation on that sort of luxury sedan is really steep at first. GAP paid something absurd like $14,000. This is the reason I advocate small or no down payments (so long as the interest rate is very low) and taking GAP.

 

[Paulsr]

Happened to me, as well. $2,500 out of pocket on a Nissan Altima.

Back in 2014, I had a Mercedes E-class get totaled in a house fire. It was relatively new, and the depreciation on that sort of luxury sedan is really steep at first. GAP paid something absurd like $14,000. This is the reason I advocate small or no down payments (so long as the interest rate is very low) and taking GAP.

Some insurance company’s include with policy now and ford motor loans use to include gap with loan

 

[Bob The Builder]

Will gap insurance cover the dealer markup for a replacement vehicle or just up to the MSRP? I'm not even sure I could find a replacement for our Jeep at MSRP right now given the current situation in our country.

 

[FriscoTXJoe]

Please know my intentions are only good here. I am that guy who doesn't do debt so take it with that grain of salt.

If your son can only afford $1,000 down, why is he buying a new car? He should be buying a $5,000 car at best. Then save up, have $3K in equity after paying it off and buy a $10K car. Pay it off, save up and buy an $18K car. Wash, rinse, repeat.

Auto loan debt is financial slavery just like credit card debt. A new car only compounds the issue even worse.

Best of luck.

 

[Owewil3225]

I always buy GAP with new vehicles . My last one got totaled when someone did a U-Turn in front of me. Hyundai paid off the $17k still owed. GAP was only $1000 and built into my vehicle loan.

Sponsored