How Do You Understand Car Gap Insurance?
Part of buying a new car or truck is making sure that you have appropriate insurance coverage for your new vehicle. Regardless of what your normal auto insurance covers, if you are buying a new vehicle, you should consider buying additional Gap Insurance. To help you understand how Gap Insurance works, read the scenario described in the following steps. Finalize the sales deal on your new vehicle. For sake of explanation, say you paid $38,000 for the new vehicle. You put a down payment of $3,500, making the amount that you financed or what you still owe to be $34,500.00. Drive your new vehicle off the dealer’s lot and down the street. In your mind, you think that you just made $3,500 in equity in your car. However, in reality, the minute you drove your car off the dealer’s lot, the value of your car decreased, meaning it went down in value. So, in just a few minutes time, your $38,000 auto is only actually worth $32,000 according to Kelly Blue Book or other vehicle evaluation methods.
