Your car will depreciate an average of 10% as soon as you drive it off the lot, but guess what won’t depreciate? Your loan!
What happens if you crash it that day or even during that first year when it depreciates as much as 20%?
Who covers the GAP?
We want to review GAP Insurance and No – we’re not talking about the store and you don’t need to go to the mall for this.
Gap insurance covers the difference between what you owe on your vehicle and what its actual cash value is. If your car loan is greater than your vehicle’s ACV, make sure that you have GAP insurance on your auto policy.
MA car insurance policies cover the actual cash value of your car, not its replacement cost. So if you smash up your car, you may find yourself owing more on loan or lease than you get from your insurer.
Say you owe the bank $30,000 on your car and you total the car. Your insurer pays the actual cash value of, let’s say, $27,000.
Gap insurance pays the $3,000 difference so you can get out of the loan.
If you don’t have GAP insurance, let’s hope you have a savings account because accidents are not cheap!
How can you get GAP insurance?
This endorsement only costs an average of $30 per year added to your auto policy.