Getting ready to purchase a new car? You may be wondering, “Do I need GAP insurance?” This is a valid question because Detroit car buyers are often offered services and products they don’t necessarily need. Even using a car financing calculator doesn’t help you account for insurance and car coverage costs. However, there are certain types of insurances and coverages that are worthwhile.
What is GAP Insurance?
To answer the question, “Is gap insurance worth it,” you have to first understand what it is and what it covers. Guaranteed Asset Protection (GAP) insurance covers the difference — or gap — between your car’s value and the amount you still owe on it. GAP insurance is available for leased cars or cars financed with auto loans.
Is GAP Protection Worth It?
Generally, yes — GAP coverage is worth it. Detroit drivers and insurance experts can usually agree that GAP insurance is a solid investment. Why consider purchasing GAP protection? Here are a few good reasons:
- Vehicle Depreciation: The moment you drive off the dealer’s lot, your car starts to depreciate in value. Most insurance companies will cover what your car is worth at the time of an accident — not before.
- Accidents Happen Suddenly: When the unexpected occurs, it’s better to be prepared with financial protection than stuck covering repair or replacement costs.
- Total Loss or Theft Coverage: GAP protection covers the difference if your car is totaled or stolen and you owe more on it than what the car’s worth.
- Low-Cost Insurance: Affordable and easy to acquire, GAP coverage — along with comprehensive and collision coverage — is a good way to cover your bases and protect your finances.
Purchasing GAP Insurance
Wondering how to go about buying GAP insurance? Explore a few of your options below:
- The car insurance company you have now may already offer it. The cost of GAP insurance can be as low as $20 per year.
- The dealership from which you purchased your car or the car loan company that lent you the money may offer it for a one-time fee.
- You can obtain GAP coverage from a company that specializes in this form of insurance for a one-time fee.
Get More Financial Tips from Public Service Credit Union
If you’re still wondering, “Do I need GAP insurance,” the financial experts at Public Service Credit can assist you. Still researching your car-buying options in the Detroit area? We can help! Contact us to learn more about why choosing a credit union for an auto loan makes sense, especially compared to a dealership or bank.