Is Your Car Worth Less Than You Owe? Lets Close the Gap!

Everyone knows that the minute you drive your new car off the dealer’s lot, it loses a significant portion of its value. If you intend to keep the vehicle for at least a couple of years, the loss of value may not bother you.

That loss of value would probably bother you more, though, if Hurricane Sandy came through and your new car floated away with everything else that wasn’t bolted down.  You might owe $20,000 on it.  However, your insurance carrier might cover it for current value and send you a check for only $14,000.  You would end up owing the bank or finance company $6,000 and have no car to show for it.

That’s not the worst news.  Discounting from the dealerships and manufacturers are also depressing the value of your car even more.  Because of this some customers can be owing as much as $10,000 to $15,000 more than the car is worth at trade-in time.

Gap insurance can fix that.  Some gap insurance policies can also be worthwhile if you simply want to trade the car in during its {upside down} period.

While the insurance product is most often referred to as gap insurance, some companies call it loan/lease payoff coverage.  If you decide gap insurance is a good idea for your situation, discuss gap insurance with your agent when you start looking for your new car.