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I plan on paying off this car by the end of the year or by mid 2018. Would I benefit from GAP insurance when my principal balance is less than the value of my car? Probably not.
I would imagine it depends on what your Insurance Carrier values the car at versus the Principal. and whether the cost of Gap Insurance, or the extra Rider on your Insurance is less.
If you think you need gap insurance where it would be a financial catastrophe if you totaled it, you probably bought too much car with too little down payment.
Also, if you bought a brand that depreciates like a stone where gap insurance makes sense, you've probably bought the wrong car. The worst ones for 2016 were the Nissan Leaf, Dodge Charger, Mercedes SL, Camaro, Kia Cadenza, VW New Beetle, Chevy Express van, Mitsu Lancer, Kia Optima, and Caddy CTS.
If you're on a really tight budget and totaling that 2017 Hyundai Accent or lower trim level Civic/Corolla you need to get to work would be a problem, sure. Buy the gap insurance.
If you think you need gap insurance where it would be a financial catastrophe if you totaled it, you probably bought too much car with too little down payment.
Also, if you bought a brand that depreciates like a stone where gap insurance makes sense, you've probably bought the wrong car. The worst ones for 2016 were the Nissan Leaf, Dodge Charger, Mercedes SL, Camaro, Kia Cadenza, VW New Beetle, Chevy Express van, Mitsu Lancer, Kia Optima, and Caddy CTS.
If you're on a really tight budget and totaling that 2017 Hyundai Accent or lower trim level Civic/Corolla you need to get to work would be a problem, sure. Buy the gap insurance.
The OP already listed out the vitals. There is no gap here. The car is worth more than the outstanding principal balance on the loan.
OP- why do you think you need gap insurance? The numbers you've laid out show that your car is worth more than you owe. Don't give money to the insurance company for no reason!
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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We have gap on one car (from State Farm) and it's only $11 every 6 months, a small amount to pay for some peace of mind. Don't buy it from a dealership, they will charge $500 and add it to the loan.
There is no point for you to have GAP insurance. If your vehicle is totaled, your insurance will pay what the vehicle is worth which in this case would be roughly 13,000. Since you owe less than that, your GAP insurance won't even come into play.
You don't need gap insurance, you need only some backbone. Enough backbone to put up a fuss if your insurance tries to pay less than you are fairly entitled to.
You don't need gap insurance, you need only some backbone. Enough backbone to put up a fuss if your insurance tries to pay less than you are fairly entitled to.
Last I checked, backbone is free.
This couldn't be further from the truth. The amount you owe on a loan and the amount that your car is worth are two entirely different figures. When you get into an accident, the insurance company has no duty to pay you what you owe on the car (unless you buy gap insurance).
You aren't "fairly entitled" to recover your outstanding loan balance; you are only "fairly entitled" to recover the fair value of the car. The two can be worlds apart, especially on new loans where the car is depreciating much faster than the loan principal is declining.
Backbone has nothing to do with gap insurance.
Quote:
Originally Posted by Hemlock140
We have gap on one car (from State Farm) and it's only $11 every 6 months, a small amount to pay for some peace of mind. Don't buy it from a dealership, they will charge $500 and add it to the loan.
This may make sense in your case, but it makes zero sense for the OP. The OP would be better off just lighting a $20 bill on fire every 12 months- at least then he gets to say "wow, that was cool". Buying an insurance coverage that is mathematically prevented from paying out is just as wasteful, except less fun.
GAP is generally for the lenders and required by them. You are better off putting the money to extra payments to close the gap, unless you just ant out and plan to go wreck the car to get out of the bad deal.
Has anybody figured if the Insurance Company uses Kelly Blue Book, or a wholesale book, which would be significantly lower in most cases.
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