Should You Add Gap Insurance to Your Auto Insurance Quotes?
Should You Add Gap Insurance to Your Auto Insurance Quotes? When you take driver's ed in school you get the standard lines about auto insurance quotes. Make sure you have liability. Consider comprehensive and collision so you're covered if you decide to play chicken with a local elk. Drive safely to keep your quotes as low as possible. What they don't tell you is that anyone with a lien on their car really needs to toss gap insurance into the mix. (gap insurance quote)
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What is Gap Insurance?
Have you been introduced to gap insurance yet? Gap insurance is the most brilliant idea anyone's come up with in a very, very long time.
It works like this. Cars depreciate. Quickly. If you try and sell your car a year after you buy it you'll never get back its original sale value. Banks recognize that fact-when they're lending. Unfortunately, so do insurance companies. What does that mean for you? It means if you're in an accident and you total your brand new car, it doesn't matter if it was your fault or not. The insurance company is going to give you the car's current value.
Now, cars depreciate much more quickly than you can pay off a loan those first few years. What do you do if you paid $27,000 for your car, but insurance says it's only worth $20,000? Your auto insurance quotes are designed to cover the car's current replacement value, so you can't even use that to argue your point. Now you're stuck with $7,000 remaining on your loan that you may or may not be able to pay back out of pocket, and you have to go out and buy a new car.
Here They Come to Save the Day...
Gap insurance is designed to do exactly what it sounds like it does-bridge the gap. If you plan ahead enough to ask for gap insurance when you're sifting through your auto insurance quotes you'll never find yourself peddling off your furniture or living on Ramen. For a little extra money each month, your insurance company will pony up the difference and you'll be able to walk away from the accident free and clear.
That's good news! Really, did you want to carry two car loans? To deal with the increased interest on the second loan because you already have a current loan you haven't paid off, and banks hate being shuffled down the queue come payment time? You can see where we're going with this. Not only do you not have the hangman's noose hanging over your head while you struggle to make two payments each month, you've also got the security of knowing that paid-off loan is going to look good on a credit report.
Of course, if you were responsible for the accident you're still going to have a hike in your auto insurance quotes...but that's a story for another day.
Article Source: http://EzineArticles.com/4610739
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