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Gap Coverage/Insurance

 


Gap coverage is not insurance from buying the wrong stuff at the mall.  Rather it has to do with auto insurance.  Gap insurance is for when car owners find themselves “upside down.”

 

What does “Upside Down” Mean?

 

Upside down means you owe more than what the car is worth.  When somebody buys a new car and drives it off the dealer’s lot, they usually end up owing more on the car than what it is worth.  That means that they owe more on the car than the insurance company is willing to pay for it in case of damage to the car.

 

What is GAP coverage?

 

While often referred to as insurance, GAP coverage is really debt cancellation. The owner is not going to have to pay more than the difference between what they owe and what the car insurance will pay out to replace the car. 

 

Why You Need it?

 

You need gap coverage if:

  • You are buying a car with little or no money down.
  • You are leasing a car.
  • You are taking an extended loan for the car
  • You rolled over any balance due from a previous car loan onto this one
  • You have an expensive car or a car that for whatever reason depreciates more rapidly than other cars in the same category.

 

 

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