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1. What is gap insurance?
   

   How does gap insurance impact vehicle financing? What are the advantages of gap insurance? Thanks.

   Tags: Meridian, MS, gap insurance, gap, insurance

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   Asked by Qnostique from Bellwood, IL
   Answered 15 years ago.

2 Answers

1. 
   Car gap insurance is one of those expenses that seem like a waste of money until you need it.
   
   In fact, unless you have suffered the total loss of a vehicle through either collision or theft, you may be unfamiliar with car gap insurance and how much it could ultimately save you.
   
   The moment you drive a new vehicle off the dealer lot, your auto insurance is probably inadequate to protect you financially in the case of a total loss.
   
   That's because your regular auto insurance is designed to pay the lender the vehicle's current cash value -- not the current loan balance. The difference can be thousands of dollars. And we all know once your new car -- owned or leased -- leaves the lot, it is considered a used car and the value of it drops significantly.
   
   In fact, the average new vehicle loses 30 percent of its value the first year. By year three, that loss in value will be close to 50 percent, says Philip Reed, senior consumer advice editor at Edmunds.com, an auto data provider.
   
   If your vehicle cost $25,000 new, your insurer would probably pay about $18,000 for a total loss during the first year. That's a $7,000 shortfall. Depending on the amount of your down payment (or trade-in equity), you would still be responsible to your lender for the balance of the loan.
   
   If you have car gap insurance, your insurer pays the difference, not you.
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   Answered by Bald Eagle Construction, Inc. 5131 Long Ave, Saint Paul, MN, 55110, 651-400-0904 (Novice with 107 pts.)

   Answered 15 years ago.

2. 
   Previous answer from Bald Eagle is excellent
   
   Depending on your driving history and your lender, you may be required to carry GAP insurance.
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   Answered by Valley Boys Roofing 10547 Bondesson Circle, Omaha, NE, 68122, 402-898-7108 (Novice with 34 pts.)

   Answered 15 years ago.