Checkmate

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A Great, Detailed Explanation Of The 'Gap'

So, let's see here: You owe the lender $33,500, but your totaled car is only worth $26,700. Your insurance company isn't going to write you a check for $33,500 — that's more than your car is worth! Its actual value is lower, factoring in how much value it lost the second you left the dealership. So you're going to be on the hook for the $6,800 difference, making payments to the bank on a wrecked car until that's paid off, with interest accruing the whole time. Unless you can just pay the bank $6,800 out of your bank account, but not many of us have that simply sitting around.

That's being upside down. It's bad because you've just lost a lot of money, and you don't have much to show for it. Even if what your insurance company pays you goes to a new car, you're $6,800 poorer, and so you can't afford as much car as you could before.

Gap insurance covers that "gap" between what you owe the bank and what the car is actually worth. That's all it covers. It doesn't mean you'll get help with your payments if you can no longer afford them. It only covers the gap in value if the car is totaled. That's all it does.

Gap coverage can be purchased at the dealer when you buy the car, but that can be pretty expensive. If you're thinking about taking out a very long loan, or not putting much money down — or both — shop around. See if your current auto insurance provider offers gap coverage. Maybe you can roll it into your auto policy.

(AutoBlog.com)

There's So Much Truth In This Picture

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This Is A Great Idea

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Yellow.

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