It is a known fact that when you purchase or lease a vehicle, it depreciates in value as soon as you drive it out of the lot. Most vehicles lose 20% of their value within the first year.
If you only put down a small deposit when you financed or leased your vehicle, the amount of your loan might exceed the market value of the vehicle in the first few years. In the event you damage or total your vehicle, or it is stolen, in this time frame, your standard insurance will only cover what the vehicle is currently worth (The “Fair Market Value” or “Actual Cash Value”. This is where GAP coverage comes into play.
Guaranteed Asset Protection (GAP) provides coverage to help pay the difference between what insurance will pay and what you owe on your loan if your vehicle is totaled or stolen. GAP coverage is cheap and could potentially save you thousands of dollars.
It is a smart decision to consider buying GAP coverage for your vehicle purchase if:
- Made less than a 20% down payment.
- Financed for 60 months or longer.
- Leased the vehicle (carrying GAP coverage is normally required for a lease).
- Purchased a vehicle that depreciates faster than the average.
- Rolled over negative equity from an old car loan into the new loan.
- The interest rate of your loan is higher than the market rate
As personal injury attorneys, we cannot stress the importance of GAP coverage. We know first-hand how pivotal GAP coverage can come to be for those involved in accidents.
If you’ve been in an accident and have questions about your legal options, don’t hesitate to contact our team. At Fulmer Sill, we are proud to deliver high-quality assistance to all our clients. Should you choose to seek our legal representation, we are confident that our experience and knowledge will produce a favorable outcome for you. Contact us at (405) 433-7414 for a free case evaluation.