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Smart Shopper Gap Insurance
440 messages, Last post on Sep 24, 2009 at 1:20 PM
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Replying to: vectra721 (Dec 09, 2007 6:24 pm) |
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you are correct, rather than "assume," it may be worth a phone call, or, heaven forbid, read your contract (.. ...) just to be absolutely sure that you ARE covered...I would hate for your vehicle to be stolen or totalled and find out the hard way you do NOT have GAP... 
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I've read the entire thread and still have questions. Hoping some experienced soul here can guide me. First, someone upthread said something to the effect of "...since most of us would have difficulty coming up with $3-10K in one day..." Is that really how it would work in the case of insurance payout on a totaled car that's less than what's owed on the note? Meaning, I'm sure the insurance company pays out the settlement amount directly to the lienholder, but then does the lienholder demand immediate payment on the difference? I guess they do, but surely people just pay that out when they can't do otherwise, taking the hit to their credit, correct? Asking the question because on my last new car purchase, which was zero down, I paid $6K below sticker but rolled in $5500 negative equity from my previous note, basically financing the sticker price. Obviously knowing I was immediately upside down on this quickly depreciating American car, I searched in vain for GAP coverage. I was unable to find any company to purchase GAP coverage through at the time. I financed the car through my credit union but they didn't offer it, my insurance company (State Farm) didn't offer it either, and I couldn't find any independent companies at the time willing to provide me with coverage. So I went without it, hoping for the best. Here I am almost 3 years later, still upside down some on the note, and was involved in a 3-car collision last week. It's looking like the car is going to be totaled out. What this will do is put me in the unfortunate position of again having to finance something with zero down, and I definitely don't want to chance finding myself in the same position again! If anyone has ANY recommendations for reputable companies that will provide GAP insurance, any info would definitely be appreciated! (As an aside, does anyone think I can/should get the negative equity on the wrecked car [probably +/- $2k] rolled into the new note, or should I just keep that separate and make payments on it until it's paid?)
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Replying to: art_vandelay (Jan 10, 2008 2:44 pm) My insurance agent added it for me when I was with Safeco. The cost was a lot less than GAP insurance through the dealer finance company. |
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Replying to: art_vandelay (Jan 10, 2008 2:44 pm) Yes, the reason being is that in order for your insurance company to complete the claim and sell your totaled car for salvage they have to have the title. In order to get the title the loan has to be paid in full. There are exceptions to every rule and you may be able to make payment arrangements with them. But then hope it does not create a problem when you go to finance you new car. Basically you would still have an open auto wanting to add another one and you would have to budget for that. There is also the possibility of rolling the deficiency into your new loan, once again you would have to qualify for it. You can still purchase GAP from a dealer at time of sale even if you are not financing with them. It really is no different then buying a warranty from them if you are not financing with them. They just include the cost in OTD price and list your CU as lien holder on the GAP Contract.
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Replying to: joel0622 (Jan 11, 2008 6:09 am) |
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"Meaning, I'm sure the insurance company pays out the settlement amount directly to the lienholder, but then does the lienholder demand immediate payment on the difference?" Yes, they will not let you continue to make payments, you must come up with the difference immediately, or 30 days, so they can sell the salvage title... It is my experience that most folks would have serious difficulty cutting a check for say, $7-10 grand that quickly...considering that GAP, even if purchased thru the dealer who charges more, would still only be $10 monthly if $500 premium, which covers you for at least 3 of a 5 year loan and probably 5 of a 6-7 year loan... If you put down at least 25% or finance under 3 years, GAP probably not necessary, since your loan balance and value of car probably amortize at the same rate, i.e. you probably owe what the car is worth if totaled, so your regular insurance would pay out enough to pay off your note...
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Replying to: marsha7 (Jan 11, 2008 11:27 am) Marsh, the dealer does not always charge more. We have Customers who are Agents for Farm Bureau and they buy our GAP because it cost less and because it is a Insurance Policy and not a Waiver Addendum. Ours also covers the deductible up to $1000 theres is $500, and ours covers 3 payments while the claim is being processed where with theres you have to continue to make payments on a car you are not driving while they process the claim. So, though you are correct in that you can find a cheaper (not less expensive but cheaper) policy keep in mind it is cheaper for a reason. |
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good to know...I happen to buy all my Gap policies thru the dealer and roll it into the payment, but many posters on this topic have stated that they can get it much cheaper thru their own auto ins agent... wherever they get it, it will be cheaper than paying out the $7-10K if the car is totalled in the first year or two, when the depreciation is the max but the amortization on the loan is the min...
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USAA charges $170 as a one time fee for GAP insurance. My dealer wanted $700, but they ended upmatching USAA when I told them - lol GAP was important to me, because I financed the whole value of the car. I used my trade to pay-off my other car loan (we have three cars), so rather then having two smaller loans, I have one bigger one. As a result, GAP seemed like a must have for me.
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