GAP INSURANCE DO AND DON'T

[jehines3]

I’d also like to add to NOT get GAP Insurance from your Insurance company. If you make a GAP claim with this protection provided by your Insurance company, how do you think that’s going to affect the renewal rates? Yes, they give and then take away.

Um, care to explain a little better here? You only need GAP when your primary policy is tapped out which means you've already filed a claim that is a total loss of the collateral with a negative LTV. At that moment, having coverage from your primary carrier to pick up the remainder is better than getting between two insurance companies arguing over the nickles and leaving the lender in the lurch. Your primary policy will pay off the loan in full.

If I totaled a vehicle there is empirical data that says I'm going to pay a higher policy premium going forward. To imply it's even higher because my primary paid $43k instead of $39k (a $4k GAP) is a bit far fetched. Insurance is complicated. The best approach, go to insurance people for insurance advice and products, not the finance office at a car dealership.

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[BillyGoat]

Um, care to explain a little better here? You only need GAP when your primary policy is tapped out which means you've already filed a claim that is a total loss of the collateral with a negative LTV. At that moment, having coverage from your primary carrier to pick up the remainder is better than getting between two insurance companies arguing over the nickles and leaving the lender in the lurch. Your primary policy will pay off the loan in full.

If I totaled a vehicle there is empirical data that says I'm going to pay a higher policy premium going forward. To imply it's even higher because my primary paid $43k instead of $39k (a $4k GAP) is a bit far fetched. Insurance is complicated. The best approach, go to insurance people for insurance advice and products, not the finance office at a car dealership.

I hear you and see your view of much of what you’ve said. However, I do see GAPs far greater than $4k every month. Many folks over accessorize their vehicles and/or roll in negative equity and to top it off, roll out the term and make minimum monthly payments.

 

[NayNay]

bunmer, we all want to see what the navy pier looks like. It’s the only color that’s not shown outside of the site

Sorry. Hopefully something will change soon.

 

[NayNay]

Um, care to explain a little better here? You only need GAP when your primary policy is tapped out which means you've already filed a claim that is a total loss of the collateral with a negative LTV. At that moment, having coverage from your primary carrier to pick up the remainder is better than getting between two insurance companies arguing over the nickles and leaving the lender in the lurch. Your primary policy will pay off the loan in full.

If I totaled a vehicle there is empirical data that says I'm going to pay a higher policy premium going forward. To imply it's even higher because my primary paid $43k instead of $39k (a $4k GAP) is a bit far fetched. Insurance is complicated. The best approach, go to insurance people for insurance advice and products, not the finance office at a car dealership.

I was all on board until that last line. The finance person started this thread.... I think you just hurt my feelings....

 

[Judge Rufus]

If you are considering financing your vehicle beyond 5 years, or needing GAP insurance, I'd recommend that you look at your economic means, your real disposable income, and consider buying a used Bronco in a few years.

A car is not worth putting yourself at financial risk.

 

[JesseS]

I am so glad to be in a position to pay cash, don't have to worry about this stuff this is the reason I am going with a BD, need to keep the cost at 45K<

 

[Austin26]

I agree with the OP said. I wasn't finance, only sold cars, but I highly recommend GAP insurance unless you're putting 20-25% down. I have stories of a young foreign student who totaled his month old Nissan Versa into his own apartment and walked back in to see me a couple days later and drove off in another new Versa. I'd hate someone to put themselves in a bad situation.

 

[RedHotFuzz]

Many (most?) leases now include gap insurance by default. Make sure you aren't paying for 3rd party if it's not necessary!

 

[Gamecock]

If you are considering financing your vehicle beyond 5 years, or needing GAP insurance, I'd recommend that you look at your economic means, your real disposable income, and consider buying a used Bronco in a few years.

A car is not worth putting yourself at financial risk.

I don’t think condescending internet warnings are going to help people. I can pay cash very easily if I choose to, but money is so cheap I’ll likely finance it as long as I can. I can pay it off anytime I want...but I can earn more on leaving my money where it is and financing things very cheaply for as long as possible. It would be silly not to with these rates...so don’t be so quick to make judgements.

 

[Judge Rufus]

I don’t think condescending internet warnings are going to help people. I can pay cash very easily if I choose to, but money is so cheap I’ll likely finance it as long as I can. I can pay it off anytime I want...but I can earn more on leaving my money where it is and financing things very cheaply for as long as possible. It would be silly not to with these rates...so don’t be so quick to make judgements.

Great for you. I hardly think that you are representative of the 190,000 reservation holders.

 

[PSUTE]

Great for you. I hardly think that you are representative of the 190,000 reservation holders.

None of us are. Very diverse group up in here...

 

[Dmk08]

bunmer, we all want to see what the navy pier looks like. It’s the only color that’s not shown outside of the site

Cant you go see it on a Limited F150?

 

[NayNay]

I know this might be slightly out of scope of the original thread, but what are the positives and negatives to financing at 60-84 months with a 20+% down payment to get the monthly payments lower but pay down the loan with extra cash on hand? Would GAP be needed then?

Example:

$50k purchase with 20k down and 30k financed for 84 months. Let’s say 0% interest for ease of math. That’s 30k/84 = $357/mo and I intend to make payments of $500+/mo as my finances allow.

Would I need GAP? Does it even make sense to do that?
Your interest rate would factor into the equation. But the way your putting it, no, you would not need GAP insurance. The GAP insurance is to cover negative equity which many people do carry through a loan. If your negative equity is a couple grand and you can write a check for it then you're fine. I always encourage my customers to call their insurance company and see if they offer it. Most banks these days will not allow a gap add to the contract on loans that are in a heavy equity position, short term loans, or low balances. I rarely ever add GAP to my customers contracts and if so it's a discussion after I have them call their insurance company 1st.

 

[Utahjazzman]

If you are upside down (owe more than your vehicle is worth) AND you total your car then Gap insurance will cover the difference. (With some limitations)

If you are upside down in a vehicle you probably shouldn’t have bought the vehicle in the first place. Therefore don’t get yourself in a position that you would need GAP insurance. ?

simple as that.

 

[NayNay]

Great for you. I hardly think that you are representative of the 190,000 reservation holders.

Ummm since you both have paid attention to your finances and have lots of extra money to toss around. I've got a Bronco reservation I'd love someone else to buy for me..... Xmas is coming.... my b-day too. Just saying. ??

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