Gap Insurance
Are you financing or leasing your vehicle? If
so, you may want to consider gap coverage. If you were to total your car,
your insurance company would reimburse you what your car was worth at the
time of the accident. If you owe $20,000 on a car and the insurance only
pays out $15,000, your in trouble. Gap insurance would pay you the
difference between what you owe and what your car is worth.
When you buy a car, it immediately depreciates
in value as soon as you drive it off of the lot. You may lose as much as
10 to 20 percent of the purchase price. Unless you put a sizable down
payment down on a vehicle, you will likely be backwards on your auto loan
for the first 2 years. After 2 years, you can think about dropping gap
coverage.
Don't assume that if your car is totaled, your
insurance company will pay off your loan. Call your insurance agent and
get a quote on gap insurance. Its affordable coverage that can save you
thousands of dollars.
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