Guaranteed Asset Protection (GAP) Insurance
If your car is stolen, damaged beyond repair, or declared and insured total loss the value your insurance company may place on the car may be less than the amount you owe on the financing. Unfortunately, you are liable for the difference... the "gap". GAP Insurance pays this deficiency. The single GAP payment is collected at the time of the sale and covers you for the length of the loan.
What type of GAP coverage is available?
The Auto Buying Service has teamed up with Safe-Guard to offer Safe-Gap. This nationally recognized product is backed by American National Insurance Company which is ranked A+ (Excellent) by AM Best. Some of the basic features include:
- 0 - 60, 61 - 72 and 73 - 84 month coverage terms available.
- Covers up to $1,000 of your auto insurance deductible
- Covers up to 150% of Kelly Blue Book retail value.
- Covers claims up to $50,000.
Who should consider GAP insurance?
- Anyone who's loan balance exceeds the value of the car they purchase. With many banks and finance companies lending up to 125% of Kelly Blue Book value, GAP is becoming increasingly common. How does your loan get to be more than 100% of the value of the car? Taxes, license fees, and aftermarket products such as extended warranties, window tinting, custom wheels, stereo systems, etc. are the main contributors. Increasingly buyers are also "rolling" the balance on prior auto loans into new auto loans. Take together, these products can lead to a significant "gap".
- Anyone considering an extended (60 month or longer) loan term. Initial payments on long duration loans take tiny bits out of the amount owed (principal) in the beginning months. During this same time the car depreciates more rapidly than the loan is paid down leading to a significant GAP.
- Anyone paying a relatively high interest rate (e.g., over 8%). Interest costs are higher. Early payments go t
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Disclosure: We developed the content for The Auto Buying Service™ while working with automotive industry clients. We hope you find it helpful in making informed decisions. While we believe the information to be accurate, we do not guarantee its accuracy.
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