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Gap Insurance

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  • dtownfbdtownfb Posts: 2,915
    I understand the entire argument you are presenting marsha7 and don't disagree. But after this housing/credit mess that caused us to be in this recession, I just think we need to change our spending habits. If you need a new car, put 20% down and don't finance a car for more than 5 years. Can't afford that, than buy used or save up the money.

    Who knows? I might be overreacting.

    You blame the current administration for our "lack of freedom", I blame our past couple decades of living beyond our means, greed and corruption. What is happening today is a direct result of living beyond our means. $700B for the banks, another $790B to keep the economy going. And unemployment is at 9.4%. Personally, I am working on paying off all my debt (except home and car) so I can handle whatever the government can dish out.
  • dtownfbdtownfb Posts: 2,915
    Actually I thought he was talking about my sister in law....
  • marsha7marsha7 Posts: 3,670
    "I just think we need to change our spending habits. If you need a new car, put 20% down and don't finance a car for more than 5 years. Can't afford that, than buy used or save up the money"...I cannot disagree with you there, but a downstroke of 20% on a 5 year loan would, IMO, have NO CHANCE of keeping up with the depreciation, especially if it is an American car...except for maybe Corvette, no GM car will be worth 50% of its purchase price in 2 years, whereas the loan payoff in 2 years, with 20% down, I think will be thousands of $$$ higher than the vehicle value...if totalled in first two years, then the owner will have to come up with thousands out of pocket, which most cannot do...so, all my arguments is this: gap insurance at a measly $10/month will remove that stress, and the cost is nominal...I do it for the stress relief...if you don't want to, don't buy it...but it IS an intelligent way for folks to protect themselves from a major payout with money they do not have...

    I was PO'd at Bush for the first bailout as much as I am about Obama...most conservatives (altho I consider myself mildly moderate...:):):)...meaning just to the left of Attila the Hun) were upset at Bush for No Child, Medicare Part D, and Bailout...and a few other things as well...
  • If you are able to pay off a new vehicle or even put a large portion of it on say a HELC, you can consider New Car Replacement. Kind of like GAP but you don't have to have a loan. I'm with Allstate and bought a Saturn Outlook August 2008. Put it on the HELC and several months later when we sold a lake-front cabin in Ark. I used the capitol gain on that to pay off that amount on the HELC. The new car replacement would replace the vehicle with a new one for the first 3 model years. IIRC it was about $5-8 per month. I increased deductible from $250 to $500, but they give you a $100 reduction each year you don't use the deductible so that dropped to $400 and this year will drop to $300.

    Also, 15-20 years ago we added a $1M umbrella policy. It covers our house, lake behind the house, pool, vehicles, etc. liability. IIRC it is between $300-$350 each year. Just looked it up $336 a year. I hate paying insurance, but the alternatives if the worst happens are unplesant to worry about. Of course, before I accumulated some assets it there was not as much risk as there is now.

    Bill
  • dtownfbdtownfb Posts: 2,915
    I'm actually pretty moderate myself. We need to start living within our means. That hurts businesses because we don't spend as much but in the long run it's better for this country. Just wish we had more than two choices.
  • I'm going to lease a 2010 Base Rav4 4x4
    first month and dmv down
    all taxes rolled into $279 a month payment for 36 months
    0% financing

    Dealer says Gap Insurance is $20 a month. My state doesn't offer outside insurance companies for Gap Insurance.

    Given that everythng is rolled into the payment and the financing is 0% and that the resale Kelly Blue Book value of Rav4 4x4 is high... does is make sense get the GAP insurance or not? Obviously if I don't have to spend the extra money I'd rather not. Can't quite figure out how much I'd be at risk if any given the specifics listed above.
    Thanks for the advice in advance.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 44,529
    All people on a lease should have gap insurance. If that car gets wrecked you are going to be totally screwed without it. Remember, as a "renter" you don't own this car, and your lease payments are nowhere near those of the person who buys this car outright----therefore, you KNOW you are upside down in this car from the get-go.

    Whether the wrecked car was leased or purchased, it has the same value. Without a big down payment, you will find yourself responsible for the difference between what insurance pays off and what you owe on the balance of the lease. And that difference is not going to be pretty.

    MODERATOR

  • Every lease I have ever done has had GAP insurance included from the get go. Check with someone who has experience leasing Toyotas to make sure you aren't getting hosed over here.
  • Mr_ShiftrightMr_Shiftright CaliforniaPosts: 44,529
    That's true...$20 bucks a month sounds pretty steep for gap.

    MODERATOR

  • Yup very expensive for GAP. GAP is usually only a few dollars a month on a 60 month finance. I think the default charge for GAP on most of the cars we sell is 675 and of course cost is a couple of hundred less.
  • kyfdxkyfdx Posts: 27,905
    ..doesn't include GAP on their leases...

    I agree... $20/mo. is outrageous...

    Offer him $7/mo., and threaten to go get a CR-V, if he can't do that... :) (Honda Finance includes GAP on all leases, at no extra charge)

    MODERATOR
    Prices Paid, Lease Questions, SUVs

  • Can anyone tell me what insurance carrier Criswell Honda of Germantown uses for the GAP insurance? After a horrible car buying experience with them I realized that that I ddn't need GAP and would like to cancel it. Unfortunately, Mr. Kolo, their finance officer, did not provide me with a full copy of the contact with the address and will not respond to my e-mails and phone calls. Help!
  • I am planning to purchase a new car - I am putting down a good-sized down payment (it'll work out to something like 35% of the car's final price). I can't imagine that I would ever owe more than than its worth. I'm wondering if I really need it and I'm thinking "hell no"!
  • qbrozenqbrozen Posts: 17,203
    nope

    '13 Stang GT; '86 Benz 300E; '98 Volvo S70; '12 Leaf; '14 Town&Country

  • marsha7marsha7 Posts: 3,670
    No. The only purpose for gap insurance is to make up the difference between what you owe and the value of the car, and this comes into play only if you put a small down payment and drive away from the dealer upside down...

    If your amount that you owe is about equal to the car's value, than gap would be a waste of time.
  • Where would one buy gap insurance? I'm trying to find a reputable widely known and used gap insurance vendor. Geico doesn't offer gap insurance which is my insurance company.
  • qbrozenqbrozen Posts: 17,203
    for a car you own or are shopping for? Dealers typically offer it. Just make sure you negotiate down the price because it is also typically expensive.

    '13 Stang GT; '86 Benz 300E; '98 Volvo S70; '12 Leaf; '14 Town&Country

  • marsha7marsha7 Posts: 3,670
    do offer it, altho your doesn't, but almost all dealers do offer it...I assume the price is negotiable, it never hurts to try...
  • imaginaryimaginary Posts: 59
    edited December 2011
    Does anyone know of anyone else who offers gap insurance besides dealers?
  • yt576cyt576c Posts: 6
    My CU ( DCU) offered gap insurance for 1 time payment of $250 to $300. But I ended up taking GAP from the dealer as he did a price match to this price - $250. The initial quote he gave me was $750.
  • Progressive does. Saved me a lot of hassle when my first car was destroyed. I thought all insurances offered gap.
  • spikaelspikael Posts: 3
    edited March 2013
    I think I'm stuck. I turned down Gap insurance at the dealer since it would have to be paid out of pocket and everything I read said the dealer would be overpriced. Now, the lender says it's too late one week later, the dealer says the lender won't let him add it for the same reason on his end. My insurance (Geico) doesn't offer it. I looked at switching but either the other companies don't offer it or it has to be done at the time of sale or be a year or two old at the most. I checked for standalone and one is not offered in NC and the other is not taking new customers. My credit union offers it only if you finance through them. I can refinance through them but not until 6 months after I establish on time auto payment history (first car loan) and clean up a few things on my credit.

    I feel like I've exhausted my options. Any other ideas other then holding out and refinancing with them? The window for them opens up again then. I just don't want to feel paranoid driving all the time.
  • ken117ken117 Posts: 189
    A question to ask is how long have you been driving and how many times have you totaled a car? GAP is very expensive insurance for a rare event. The shear amount of profit a dealer makes on GAP makes it poor way to spend money. Do you really need GAP or are you falling victim to the dealer's fear mongering?

    Personally I have been driving for fifty years, my wife for forty fiver, and my children for up to fifteen. Never a single car totaled. We are not unusual.
  • spikaelspikael Posts: 3
    Thank you Ken. That's a very good point. I think it's more the fear of someone else's stupidity that has me on edge. I've been driving for 15 years and have never totaled a car. Only had two accidents ever. Rear ended twice from people following too close that were very minor and not reported. I consider myself a good driver and very cautious. I had a coworker who ended up upside down not long ago so I think that had me.worried too but then again our driving styles are completely different. :)

    Thank you for your much needed rationale.
  • carthellcarthell Posts: 124
    I live in an urban area. Having gap for my first car saved me a few years of taking the bus to work when my car was taken out. 2nd car, I cancelled the coverage as soon as I was financially comfortable with paying off the car note.

    If you don't have savings and don't live in a rural area, you should consider gap. In the meantime, the original poster should straighten out his or her credit situation ASAP so that when the opportunity to refinance comes, a lower interest rate can be offered with the gap insurance.
  • marsha7marsha7 Posts: 3,670
    is certainly useful if your outstanding balance is much higher than the car is worth, esp if you rolled over negative equity from a previous car loan...ken117 has a good point, but I have always bought Gap coverage simply because I usually put low down payments, so, driving off the lot I am already in negative equity...

    To some, it is a ripoff...I will gladly pay $400.00 over the life of the loan to save the $4-6,000 I may owe in the event of a total...I have been driving for 45 years, and have never totalled a car, but I see clients who do, and totalling happens more often than you think...

    It is like any other insurance...you can buy or gamble without it...if you need it and don't have it, you will kick yourself for not buying it...if you never need it, you have beat the system...

    Same reason why some folks buy life insurance and some don't...one can argue that every year you don't die you have wasted your money, I just think it is prudent to buy it...same with extra liability insurance (high limits) and Gap insurance...

    Folks lived w/o gap for years, as it used to be available only on leases...now it is available on leases and purchases, and I think it is worth it...but, like ken117, you may not...
  • igozoomzoomigozoomzoom Waleska, GeorgiaPosts: 791
    Very good point in making the comparison carrying high liability limits, it's well worth the money for the peace of mind it gives you knowing that you are very well protected! People look at me like I just bought a bag of magic beans when they find out I carry 500/500/100 limits for liability and the same limits for Uninsured/Underinsured Motorist coverage. But once you pass 100/300/100, higher limits only cost a small percentage for each increment.

    For some reason, some of the HUGE insurance companies (State Farm & Allstate, in particular) insure a customer with decent liability limits (100/300/100 usually) but only 25/50/25 (minimum) UM/UIM! I quote several customers a week who are currently with either of them and I rarely see higher limits for UM/UIM. The few times that I have had one of their current customers with higher limits it was because they were informed enough to ask for it! I always quote with higher than average liability limits and matching UM/UIM limits. It's cheap coverage and why wouldn't you want the same amount of protection for you and your passengers that you have to protect a stranger?

    I'm also a firm believer in GAP coverage, and you can buy it from your auto insurance company cheaper than the dealer's finance department. It will also be very simple to drop a few years down the road when has no value because the loan balance is much lower than the value!

    But a BIG FYI for anyone with negative equity being rolled into you new loan-- read the fine print and the entire, dreadfully boring policy to make sure you are fully covered!

    Quite a few insurers stipulate that their GAP coverage will only cover what they calculate as the difference between ACV and your loan balance MINUS the negative equity from a previous loan!!! The only upside of insurers makign this exclusion is that the coverage is less than half the price of GAP policies that will cover the full loan balance after the at-fault's insurer pays. But I just want people to be certain they actually have the coverage they think they have!

    Most people would rather have their fingernails pulled off with pliers rather than read their insurance policies. That's where a genuinely good agent comes in very handy! Once you find the an agent who actually cares about protecting you, your family and your assets, they'll always have your back!
  • ken117ken117 Posts: 189
    Have to diagree about GAP insurance in many instances. Never if the GAP is purchased from a dealer.

    Generally on a purchase of a new vehicle the vehicle is purchased well under MSRP and usually with some additional money down or a reduction due to the value of a trade. In such cases, the actual difference in value covered by GAP would likely be $2,000 or less. I recently bought a new vehicle and the GAP coverage offered by the dealer was priced at $600. Spending $600 for potentially having to come up with $2,000 or less is not prudent.

    On the other hand, for purchases and leases with no down payment or, heaven forbid, little reduction from MSRP, GAP might be beneficial. But only, as you mention, if purchased away from the dealer. And with many leases, GAP is already included.

    People buying vehicles need to be cautious about spending money in response to the fear of a future event. Dealer F&I people are well trained in using such fear as a selling technique. Purchases made under such conditions are usually regretted at a later date, after the person has had sufficient time to consider the purchase.

    As you mention most of the F&I products, like GAP or the service contract, can be purchased eleswhere for considerably less money.

    It always amazes me how people will fight hard to save an extra couple of hundred dollars on the price of a vehicle but will pay hundreds or thousands for various overpriced products in the box.
  • Has anyone heard of this company, gapdirect.com?
    Are they legit??

    They offer $185 gap insurance. Trying to decide if I should get dealership gap or go with gapdirect.com.

    Any advice??

    Thanks
  • kyfdxkyfdx Posts: 27,905
    Looks like they only offer it in seven states.

    Cheaper than what the dealer will offer, I bet.

    MODERATOR
    Prices Paid, Lease Questions, SUVs

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