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We bought a new car yesterday that was financed 100%.
The dealer offered gap coverage which I declined - they wanted some ridiculous amount. I thought that I could get this coverage as an endorsement through State Farm who insures our car. Well, it turns out that SF does not do so unless one finances with them through their bank and then it is included as part of the loan terms at no extra charge.
I have no regrets about not taking the coverage through the dealer because their rates are excessive but I would like to know where I can buy such coverage as a separate policy. I would probably need it for a couple of years while I am upside down in the event of a total loss.
I have even toyed around with finding an insurance company that includes gap coverage with their auto premiums and switching from SF but that seems a bit extreme especially given that we have been pleased with SF both in terms of cost as well as claims servicing ..... when we have had a claim.
Has anyone found an insurance company that sells separate gap coverage at a reasonable rate?
Do you have the money to make up the difference? 20K car means 5-6K if it gets totaled? If so just drive carefully and don't wreck the car, saving the insurance costs.
If you have your liability through State Farm, can't you just add full collision and comprehensive through them, too, and then cancel the insurance that was added on through the dealer, and not have to pay their rates for the partial coverage?
Do you have the money to make up the difference? 20K car means 5-6K if it gets totaled? If so just drive carefully and don't wreck the car, saving the insurance costs.
Not sure I follow..... do you mean not to have any collision and comprehensive coverage or not to worry about gap coverage?
If you have your liability through State Farm, can't you just add full collision and comprehensive through them, too, and then cancel the insurance that was added on through the dealer, and not have to pay their rates for the partial coverage?
We have collision and comprehensive through SF but if the car were totaled SF would basically pay the KBB value of the car and it would be less than the amount owed on the loan.
We declined all of the usual stuff that the dealer offered so we don't have any insurance through the dealer.
Always a good idea to get GAP....at the right price. If you can get it for $500 or less, go for it.
You could refinance the car elsewhere and get the GAP policy. Try your local credit union, or an online bank. Pentagon Federal Credit Union has some excellent rates right now. I had an auto loan through them at one time. 1.99% for 60 months, and GAP was something like $300.
Has anyone found an insurance company that sells separate gap coverage at a reasonable rate?
A couple of insurance companies offer new car replacement with their insurance plans. Effectively, if you total your car the insurance company buys you a new one (or newer). However, I don't know of any that offer GAP insurance separately from a loan.
Always a good idea to get GAP....at the right price. If you can get it for $500 or less, go for it.
You could refinance the car elsewhere and get the GAP policy. Try your local credit union, or an online bank. Pentagon Federal Credit Union has some excellent rates right now. I had an auto loan through them at one time. 1.99% for 60 months, and GAP was something like $300.
Yes, we love Penfed and I checked with them before we bought the car. But the loan we got was for an even lower rate than Penfed.
I'm an accident attorney and the question of whether one needs GAP Insurance or not frequently comes up when I participate in discussions about car insurance.
GAP Insurance is essentially an expensive way of insuring yourself against a very specific situation. If you buy a new car, the car will depreciate more rapidly in value than you might expect. Unless one makes a large down payment, one will end up owing more on the car than its fair market value is.
If the vehicle is totaled, the obligation of an insurer is to pay only the fair market value. This may leave you with a deficiency of several thousand dollars, depending on the deal you made and the point at which the car becomes a total loss. If purchased, GAP Insurance covers the difference between the amount owed and fair market value.
I know people who won't consider buying a vehicle without GAP Insurance. I personally choose not to have it for the reason I think it is too expensive when you consider the likelihood of the risk you are purchasing it to cover. However, I have some money set aside and if my car were to become a total loss, I'd be able to make up the difference between that and the amount I owe on it. Others, may not be in my situation.
Its something you need to carefully evaluate and determine. Every situation is unique and that is why it is good that it is not mandatory.
Not sure I follow..... do you mean not to have any collision and comprehensive coverage or not to worry about gap coverage?
doesn't matter if you have comp and coll, if you total the car, your insurance is only going to write you a check for the value of the car. With new cars, they drop in value 5-6K right off the lot. So, if you owe 20 and insurance writes you a check for 15, are you prepared to cough up the additional 5 to pay for the car?
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